Get your factoring facility now before it snows

According to a press release from Close Invoice Finance a recent survey that they have conducted reported that a number of companies in the West Midlands admitted to being ill-prepared for the disruption that a bad winter will bring.

The local head of Close stated that “If businesses aren’t prepared for the worst, it can have a serious effect on cashflow which everyone knows is the lifeblood of all businesses.

“The key for getting through one of the worst winters we’ve seen for years is preparation. Failing to plan could have a serious impact on your business and result in it being unable to trade.”

He went on to state that his “advice to businesses would be to have in place suitable funding arrangements to ride out any potential cashflow problems associated with the weather. Invoice finance is one option. It enables businesses to access cash immediately, easing any financial pressure and allowing companies to get on with what they do best – running their business.”

So now we know, if it looks like it’s going to snow, contact your friendly factoring broker and get your factoring facility in place before it has time to settle.

Factoring brokers and the internet

More and more supposed factoring brokers are using the internet to attract customers. Unfortunately this means that anyone with some web design skills can throw together a site and try and generate some factoring leads but it can’t be in the customers best interests if the person behind the website doesn’t know the first thing about factoring.

Anyone who keeps an eye on Google will have noticed a new website has recently appeared on page one with what on the surface appears to be a decent website containing a few fairly standard articles about factoring.

The website contains logos from Venture, Bibby, Lloyds TSB, Aldermore, Close and Hitachi which purports to give the impression that the company has a relationship with each of them, but does it?

There is an invitation to submit details on a contact form but nowhere on the site does it have an address or telephone number and having looked up ownership of the domain in Nominet I have never heard of the owner and neither has anyone that I have asked although a quick Google check shows that as well as articles about factoring he has also published articles about getting rid of spots and how to cook a pizza.

Most internet savvy people would never deal with a website that doesn’t have either an address or telephone number but unfortunately many of the potential customers won’t be as wary.

This isn’t the only one as I came up with another last week that have a highly professional and expensive looking website with branches in Glasgow, Birmingham, Newcastle, Bristol, Manchester and Nottingham which makes it look like a pretty sizeable outfit.

It even has testimonials including one saying “We found ****** to be absolutely terrific. They arranged an invoice factoring deal for us quickly and efficiently. Would certainly recommend them” and this was signed by DL, Operations Manager of ABC Ltd

Intrigued to find out more about this high profile outfit I looked up the ownership of the website to see that it registered to the very same ABC Ltd who gave it such a glowing testimonial and a bit more research shows the website owner is a actually a contract cleaning company.

I have often said that factoring companies should be regulated and I also think that it would be in the customers’ best interests if brokers were also regulated as I’m sure that you can’t get best advice from a broker unless he knows the industry, but unfortunately the poor old customer has no idea if his broker knows what he’s talking about or not and it seems that there are a lot around who don’t.

Factoring Blog review of the first half of 2009 part two

Factoring charges in the past have been driven down and down as one or two of the major bank owned factors have tried to buy market share at any cost. The activities of an internet lead generator with an automated online pricing model hasn’t helped as any such thing must be price driven thus driving prices down even further and the factors have tried to redress this by looking at other ways of increasing revenue rather than affect their headline rates. To this end we have seen the introduction of facility commissions which is a percentage of the agreed facility and is addition to the factoring commission. At least one of the big bank owned factors is now incorporating renewal commissions too if the poor client wishes to renew his facility at the end of the year whilst the worst one of the lot has been sneaked in by one of the big boys who has stuck in a termination fee which becomes payable if the client wishes to terminate his facility whatever the reason whatever the time.

Wageroller and Smart Flow Finance have bitten the dust although there are rumours that Wageroller has resurfaced under a new name but the only factoring company to have succumbed in the first quarter of the year has been Challenge Finance.

I started off the year by announcing that GMAC had pulled down the shutters for new business but I had a meeting with one of their regional directors yesterday who told me that they were now in full steam ahead mode and with quite an innovative range of ABL products too.

Even in a fast changing world like the one we currently live in there are some things that never change. At the end of last year I announced that the parent company of Cattles Invoice Finance were about to sell the company and that would happen “any day now”. Six months down the line the supposed sale of this factoring company is still just round the corner as the parent gets further and further into the mire with it’s negotiatons with bankers unresolved, it’s accounts delayed as the auditors won’t sign them off and the shares suspended. Still I’m sure that a Cattles insider will be contacting me shortly to let me know that the sale will be happening “any day now” as has been happening at monthly intervals throughout 2009 so far. 🙂

The other enigma is Close Invoice Finance which at one time was a market leader in terms of client satisfaction but where the stories of ill treatment from unhappy clients just seem to keep on coming. This year to add to the confusion Close have closed the operating centres in Birmingham making a number of redundancies in the process in order to cut costs whilst at the same time employing an industry heavyweight on what must be a huge financial package to run the Northern operation, as well as buying a small factoring operation in Northern Ireland.

My predictions for the second half of 2009 are to expect much of the same. The market will still be tough to operate with the well run independents riding out the storm without too much damage to either their reputation or bottom line but I think that the recession coupled with the tough attitude taken by the credit insurance market will start to see big problems in the top end of the invoice discounting sector with companies turning over in excess of £50m failing and possibly resulting in significant bad debt losses for the banks operating those facilities.

Time will tell.


Another one bites the dust at Close Invoice Finance

We were approached last week by a company who had only been factoring with Close Invoice Finance for two or three weeks but had already run into serious problems and wanted us to find them an alternative factoring company.

The company that we introduced realising the urgency of the situation did their fact finding visit straight away and discovered that there had been breaches of the factoring agreement but sensing that the underlying business was sound they decided to put the deal forward for approval by the credit commitee which was due to meet on Monday 30th March in order to approve the offer of a facility.

Unfortunately Close couldn’t wait one working day and appointed an Administrator on Friday 27th March. It’s quite a sad state of affairs as we thought that the business was salvageable but no doubt by the time the factoring company has charged a load of extra fees and the Administrator has had his whack there won’t be anything left for anyone.

This isn’t the first story that we’ve heard about the ultra hard line being taken by this particular factoring company since the new MD took over and whereas once upon a time they used to have a fine reputation for service they are no longer on our approved list and haven’t been for some time.