Ian

Venture Finance Direct has been shut down

by

It seems that the Venture Finance experiment to automate the whole factoring process and offer a stripped down facility online to the smaller enterprises has not been successful and is being closed down.

It was an interesting concept starting off with an online application form but it would appear that the applicants / clients were of poor quality and the whole concept was causing too many problems and losses so had to end.

Where are the companies who have been turned down by everyone else going to go now 🙂

ABFA statistics part 3

by

As most industry insiders are aware a large number of independent factoring companies are funded by the big banks by means of back to back facilities. It occured to me that it’s possible that some of the 35 companies with annual turnovers in excess of £100m recorded in the quarterly statistics of the ABFA are actually the factoring companies that Lloyds TSB Commercial Finance and their ilk are funding.

If that is the case then all of the statistics are grossly inaccurate as many of the figures for the independents will have been included twice – once as the £100m+ funding from Lloyds TSB to the factoring company and again as the same funds are put out to the many clients of the factoring company.

I did ask some of the great and good of the factoring industry if they knew the answer but all said that whilst it was an interesting question they didn’t know.

ABFA statistics part 2

by

Having a closer look at the ABFA statistics for the factoring and invoice discounting industry for the first quarter of 2009 I was struck by one seemingly insignificant statistic that the number of clients with annual sales in excess of £100m had dropped from 248 to 213

I wonder what happened to these 35 companies? Some may have shrunk to a stage where their turnover was less than £100m so came into a lower category but that is fairly unlikely. Some more may have ceased using their invoice discounting facilities replacing them with something else but again I think it unlikely which leaves the worrying fact that 35 companies turning over in excess of £100m each have gone bust in the first quarter of this year.

Assuming that each of those companies were turning over the bare minimum of £100m and their debts turned in the ABFA average of 59 days the total outstanding debts of these companies would be in the region of £650m and assuming an average investment of 70% there would be factors funds invested of £455m

Most of us who have been involved in the “collect out” of bust clients will know that there is often a shortfall in collections as the disputes start to crawl out of the woodwork and the clients customers go bust and there is a good likelihood that losses may be incurred in that situation.

I guess that due to the size of the facilities these will all be bank factors involved and I wonder what sort of losses will be involved when collecting out an investment of at least £455m from 35 bust clients. My guess is that some of the bank factoring companies will be sitting on potentially enormous losses at the moment

ABFA statistics

by

The ABFA have recently published the factoring and invoice discounting statistics covering the first quarter of 2009. Whilst this shows a small decline in almost every area from numbers of clients to advances made it should come as no surprise in the present economic climate.

The number of clients at the end of March 2009 was down to 46,999 from 48,536 at the end of the previous quarter and whilst 2,260 new companies were welcomed to the world of factoring and invoice discounting 3,027 disappeared in the same period.  Assuming that the majority of the 3,027 went bust in one way or another it’s not surprising that insolvency practitioners are the factoring companies new best friends.

I wonder if Eric Cantona was thinking of the relationship between insolvency practitioners and factoring companies when he came out with his now legendary quote ” When seagulls follow the trawler it is because they think sardines will be thrown into the sea”

Challenge Finance enters Administration

by

Challenge Finance the small Kent based factoring company has been in trouble for a few years if the rumours are to be believed but it seems that it’s backers have finally lost patience and pulled the plug by appointing Administrators.

Hopefully a white knight will hurridly appear so that the repurcussions for the 90 clients won’t be too severe  as if Bibby another factoring company were to move quickly the disruption would be minimized.

Hopefully Coface won’t lose too much money on this failure as they are still licking their wounds over the Wageroller debacle which cost them a pretty penny