Ian

Factoring awards – oh no not again

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Most of my regular readers will know that I have a bee in my bonnet about factoring awards. It’s not the concept of industry awards themselves that I object to but the fact that they tend to be awarded to the most inappropriate factoring companies with many awards being won by the company who can drum up more people to vote for them than any others.

factoring company of the yearMy main complaint is that factoring companies can stick logos on their marketing material claiming to be award winners which will often fool people into thinking that the company in question is genuinely the best in it’s field when frequently they are anything but.

The most recent awards short list to come across my desk was the Insolvency and Rescue awards and the short list for Asset and Invoice Finance Provider of the Year was as follows:-

Gener8 Finance
Hitachi Capital Business Finance
MyInvoiceFinance
Secure Trust Bank Commercial Finance

I have seen some unusual shortlists in my time but the above just about takes the biscuit.

Gener8 Finance is a company that I refuse to deal for reasons that I won’t go into in public.
Hitachi Capital Business Finance is a factoring company that has a good reputation for service levels but I didn’t think that they had much of an appetite for companies with a chequered financial history such as those that may be generated by the insolvency and rescue profession.
Myinvoicefinance is known as a small broking outfit although they may fund the odd client or two themselves and finally
Secure Trust Bank Commercial Finance which has only been trading for a few months.

A few of my factoring buddies attended the prize giving dinner and I am reliably informed that when the winner was announced it was met by a good deal of sniggering from many of the tables who wondered whether their good fortune had anything to do with the fact that they were sponsoring some of the other awards.

To save me starting another blog post on the same subject I recently received an email from Wealth & Financial International telling me that “after months of voting, research and hard choices they had finally decided on the worthy winners of this year’s awards, celebrating the service, skill and dedication of individuals and firms across a multitude of financial disciplines and sizes; from local heroes to national treasures, from single-office firms to international juggernauts, we celebrate them all.

I am pleased to announce that Factoring Solutions has been awarded “Recognised Leader in Specialised Factoring Brokerage – UK and now I will proudly adorn this great honour on my website but no sniggering please 😀

More factoring company dirty tricks

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Since I wrote my last piece concerning a factoring company acting less than respectably I have been forwarded an email sent to most if not all of the clients of a spot factoring company by those masters of self promotion Market Invoice Ltd

From: Thomas Sutcliffe
Date: 21 October 2015 13:29:54 EEST
To:
Subject: MarketInvoice
Hi *****

I believe you are currently using **************** as a spot invoice finance provider.

MarketInvoice work similarly but we are on average 50% cheaper, don’t take debentures or guarantees, have higher advance rates and are much quicker at getting the funds to you.

We have a quick online application if you want to see if we can fund your business. https://p.marketinvoice.com/app#/seller/account/create
It’s free to do and should only take a couple of minutes. Thanks.

Kind Regards
Thomas Sutcliffe
Business Development

Leaving aside the ethics of approaching the clients of a competitor to tell them that you are cheaper (which is highly debatable) Market Invoice are also claiming that they don’t take debentures which again is untrue.

It is a fairly simple matter to conduct a search at Companies House to find details of all the companies that a factoring company has a charge over and interestingly enough if one were to do the same to Market Invoice as they have obviously done to others you would find that the company that allegedly don’t take debentures have actually taken quite a few as follows:-

06059488 Absolute Edge Ltd
08239256 Annecto UK Ltd
08732701 Applebridge Construction Ltd
OC348485 Barlows (Retail Electrical Solutions) LLP
08768452 Barlows Retail Limited
07706549 Blucon Limited
07268881 Build4me Limited
06746083 Byyd tech Limited
08257527 Cable Power Limited
07988462 CM One Ltd
01494452 Computer Remarketing Services Ltd
05465993 Concorde Solutions Ltd
03271609 Concrete Media Ltd
07782581 Crafts Bargain Corner Ltd
08502710 Critical Resource Ltd
07632876 Direct Office Contracts Ltd
04220936 Deamtek Ltd
08863706 East Midlands Energy Services Ltd
08016588 Elimco UK Ltd
08881132 Est Renewables Ltd
04452584 Focus Scaffolding Ltd
07331792 Freedom Renewables Ltd – In Administration
05487099 Golf Bookers Ltd
03907607 Gradweb Ltd
07003407 Greenbuy Energy Ltd – In Liquidation
04849603 Greencyc Ltd
08295766 Greenoke Energy Ltd – In Liquidation
05698290 Gyrocom Ltd
07646296 HeadsGRP Ltd
06936063 Hooper Productions Ltd
07373180 Ice Academy Global Ltd
02939105 Ice Energy Heat Pumps Ltd
05136537 IHS Corporation Ltd
08136988 Insulation NE Ltd
04731727 ITS Projects Ltd
04349192 LCC Deployment Services UK Ltd
04708094 Maynards Electrical Contractors Ltd
03713679 McKinney Rogers International Ltd
07109707 MP Energy Ltd
03848698 Osprea Logistics Ltd
07556396 Patchez Ltd
06060169 Peerius Ltd
03135186 Phoenix Electrical Engineering Services Ltd
05367566 Pixel Projects Ltd
SC327304 Prater Contracts Ltd
06619874 Property & Training Solutions Ltd – In Liquidation
03000135 Ralph Coleman International Ltd
08067061 Rebel Minds Ltd
06741422 Reconsulting RTC Ltd
04933736 Resorthoppa UK Ltd
03402188 RNR London Ltd
08667253 SIS Digital Media Ltd
06894877 Site One Ltd
07437386 Somo Custom Ltd
06860380 Somo Ltd
07419084 Specific Heat (London) Ltd
07774640 Swiss Bullion Ltd – currently subject of winding up petition
08327554 Synchro Software Ltd
SC355209 Taylor Hopkinson Ltd
08214283 Tesla Energy Services – In Liquidation
05896266 The Knowledge Engineers Network Ltd
08236274 Threen Site Services Ltd
06761659 Trendstream Ltd
07250861 Twincentric Integration Ltd – currently subject of winding up petition
07326023 UK Room (London) Ltd
05711612 Woods Environmental (Leeds) Ltd

That’s quite a lengthy list for a company that allegedly don’t take debentures and I sincerely hope that all of the many factoring companies and brokers reading this aren’t going to “do a Market Invoice” and approach them all to try and pitch them to change providers but if they did I suppose that it would simply be a case of karma.

I recently expressed concerns in another blog post that perhaps due diligence on debts put forward for funding to internet invoice discounting companies was either not done or was inadequate and that fingers might be burnt as a consequence. If a normal factoring company funds debts that aren’t recoverable for any reason they stand to lose money but in the Market Invoice business model it’s the online investors that stand to lose money if a debt is irrecoverable and a look at the documents filed by the Administrator of Freedom Renewables Ltd at Companies House show what a dicey business it can be if the proper homework isn’t done as it seems that one or more invoices issued by the company that were funded to the value of £633,790 are the subject of dispute by the customer and the remaining non factored invoices which probably come under the terms of the floating charge seem to be a bag of brown stuff too.

Links

Statement of Administrators Proposals

Notice of Statement of Affairs

factoring and the dirty tricks that some factoring companies get up to

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There was a small media announcement in the press recently that Aldermore would be making redundancies in their Aldermore Invoice Finance division. This is the sort of occasion where anyone with a shred of decency would feel sympathy for our factoring colleagues who may lose their jobs through no fault of their own.

It seems that not all factoring companies have that shred of decency though as it has come to the attention of The Factoring Blog that one particular factoring company is trying to use this occasion to rubbish their competitor for their own ends.

We have been forwarded an email sent out by an individual at Metro Bank Invoice Finance that stated:-

“It’d be worth cascading this out to the sales teams as if they’re currently in competition for deals with Aldermore, it might help us win the business (that and the fact we’re better). Also if we have any clients working their notice who are looking to move to Aldermore, it might help us retain the client.”

Factoring Blog says thumbs downPersonally I find these tactics quite abhorrent and I’m appalled that any supposedly respectable factoring company would stoop that low. I also find it a great shame that the factoring company in question was Metro Bank SME Finance which was a company that I once held in high regard.

In the old days before Metro Bank got involved the sales team was run by John Wilde who was a man of high principles and I’m sure that he would never have allowed the sales team to use gutter tactics but alas he has gone and the company is now owned and run by bankers and I suppose that we shouldn’t expect old fashioned values from that much devalued of species – bankers.

What is ironic though is that a few unfortunate souls at Aldermore are going to lose their jobs through no fault of their own yet once Metro Bank got their feet under the table at SME Invoice Finance their senior sales team started to leave in droves of their own volition

The so called alternative invoice finance market

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For many years factoring and invoice discounting has been referred to as alternative finance but in recent years a new breed of invoice financier has emerged who are claiming the sobriquet for themselves and consigning traditional invoice finance to the mainstream in the process.

Many factoring insiders have concerns about the viability of the business model with little or no due diligence done on new clients, little or no security taken in the event of client or customer failure and quite a few complaints being heard about the customer service or lack thereof from one of the platforms in particular with one factoring company telling me that they have received quite a few enquiries from companies who want to switch out of internet based invoice finance to traditional factoring due to the poor customer service, not knowing what rates will be levied and the high charges if an invoice becomes overdue for payment.

It is a fact of life that brokers will introduce potential business to a factoring company but will often lose out to another broker and/or factoring company and this happened to me recently and I lost my first “deal” to an internet platform in the process.

Thumbs DownThe prospect was a construction related company turning over £10m but what concerned me (apart from the lost commission of course) was the minimal amount of due diligence that was done.

There aren’t that many mainstream factoring companies that are happy to fund construction related companies due to a variety of contractual issues but those that are, do so with a full understanding of the risks involved having inspected the underlying contracts in the process and some employ the services of a QS to ensure that they understand the risks fully.

The so called alternative invoice finance funders seem not to bother too much about understanding the contractual issues and rely more on the size and strength of the customer.

Do the many hundreds of investors looking to maximise the returns on their savings understand the risks involved every time they line up to provide funding for construction related invoices?

The alternative platforms are the darlings of the media at the moment but I wonder how much of that is down to their expertise in marketing and self promotion rather than anything else.

Personally I think that the next year or two may see some changes with at least one of the players out of the marketplace entirely and another modifying and strengthening it’s criteria and requirements but as with everything if the concept turns out to be successful we will see loads more queuing up to get into the market

Anyone want a cash back on their factoring charges?

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A few weeks ago I gently poked fun at a factoring company for one of their press releases on revolutionizing the industry but more for the way the press release was written than for what they were trying to do but the same company have now gone one better by introducing a factoring facility which offers a cashback at the end of the first year of 10% of the fees paid which whilst being of benefit to the client won’t be liked much by many of the unethical broking community.

cashback of factoring chargesMany factoring companies pay a percentage of the first year’s minimum annual fee paid by their clients, to the introducing broker which is why the more unethical broking outfits will try and churn the client at the end of the year so that they can earn another fee from a different factoring company. Ultimately that benefits no-one except themselves but it will be interesting to see whether the introduction of a 10% cashback of the charges paid will be enough to stop this whirlygig of clients or whether the more unethical brokers will just not introduce clients to them if they feel that they may not be able to churn them at the end of the year.

It isn’t just the rebate of the charges that make this new offering of interest as the facility carries no up front fees at all and no minimum charges. Additionally they won’t be screwing their clients with BACS charges or online access fees either and the charging structure is simplified as there will just be one charge payable on sales as the interest charge has been abolished.

The icing on the cake is that as well as not having any minimum fees payable the facility carries just a 28 day notice period making it very easy to exit if one so wishes without penalty.

Similar facilities have been available for some while now but this one is suitable for companies who require funding up to £100,000 which probably equates to turnover levels of up to £750,000 and if anyone wants any more icing on the cake the factoring company involved is one with a very good reputation for their high service levels.

Any company that feels this type of facility could be of interest, my contact details are in the right hand sidebar so feel fee to give me a call without any obligation or charge safe in the knowledge that Factoring Solutions has never, ever tried to churn a client for their own gain.