Factoring companies

Save money and use a factoring broker

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I like to think that the major advantages of using the services of a specialist factoring broker like myself is that many of the factoring companies don’t perform as well as they claim and I know the market sufficiently well to steer companies away from the poorer performers.

Whilst some companies might approach me with this view in mind I’m sure that many would rather approach the factors directly believing that it would save them money on the basis that if I receive an introductory commission from the factoring company they would get a cheaper rate by going direct as the factor wouldn’t then have to pay me.

I received an email last night from a prospective client asking me to quote an approximate rate for his business. I spoke to my contact at the factoring company that I thought to be most appropriate who quoted me a rate which I subsequently emailed to the prospect.

I received a telephone call this morning from him saying that he wished to go ahead at the quoted rates but he was quite surprised when I told him which factoring company it was as he had already approached them directly and they had quoted a significantly higher rate.

Davenham is the latest factoring company to cease

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It has been well known for a while that Davenham were in serious trouble and they have been pretending to lend recently rather than actually doing so.

The staff were told to expect a decision on the company’s future by the end of June and that future now seems to be that they are formally ceasing to write new business whilst the company enters “collect out” mode.

Whilst it is possible for them to collect out their loan book in a prudent and orderly manner as claimed by the company, one cannot do that with factoring so I hope that arrangements are in hand to transfer the book to another factoring company causing as little pain as possible in the process.

This is the third factoring company in a very short space of time to crash into the rocks following hard on the heels of Aston Rothbury a few days ago and Challenge a few months ago so let’s hope that this is the end of it now as it doesn’t do the industry any good at all.

Factoring statistics for 2009

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Apologies for not updating the blog recently which was in part due to an extended vacation thanks to yet another misfortune emanating from Iceland plus the fact that there doesn’t seem to be anything of interest happening in the factoring world.

The final quarter’s stats for 2009 were recently published by the ABFA and the figures for all of 2009 make quite depressing reading with overall client numbers down by 10% but it’s when one starts to look carefully at individual statistics that it starts to get worrying.

The largest number of clients overall is in the 0 to £500,000 turnover category with 38% of all clients falling within this grouping. The number of clients in this group fell by 11% over the year but the worrying statistic is that overall advances to this group fell by a whopping 56.8% from £908m to £567m

At the end of 2008 the ABFA reported a total of 48,022 companies with either factoring or invoice discounting facilities and whilst this number fell to 43,590 by the end of 2009 the factoring companies that provided the statistics reported that they had lost 20,892 clients throughout the year and gained 15,100

20,892 lost clients is an extremely large percentage of the average number of clients overall and should give cause for concern to observers.

Barclays seem to be the biggest loser as their client numbers went from 4,967 at the end of 2008 to 3,723 at the end of 2009 which is a reduction of 25%

End of 2009 – a difficult year for factoring

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It’s been quite a busy year with several small factoring companies either going bust or being taken over or both and with all existing factors finding it tough going.

I would imagine 2010 to see much of the same with one factoring company about to be taken over which I guess will be the first of several in the coming year.

However tough the market there never seems to be a shortage of people clamouring to get into it. Whilst some do it as they need to provide themselves with an income and they see the setting up and running a factoring company as the route to do that others have a genuine desire to be in the business. Santander comes into the latter category and with many of the country’s best loved names now part of the group one can hardly blame them even if they chose a most unusual way of doing so. There is also another new factoring company to be launched shortly which I have no doubt should be successful as there are no pressures there to take on business at all costs as seems to be the case with several of the more recent newcomers.

One of my hobby horses over the year has been the plethora of awards handed out to all and sundry with almost everyone being able to claim some sort of award for being the best factoring and discounting company of the year and as if to round off the year nicely a press release landed on the blog’s desk from Business Moneyfacts announcing a forthcoming event to “celebrate the best products and service in the business and commercial finance world”

The nominations for “Best Factoring & Invoice Discounting Provider” are:-

Absolute Invoice Finance
Bibby Financial Services
Close Invoice Finance Limited
Credit Agricole Commercial Finance
IGF Invoice Finance Limited
Venture Finance PLC

I have no idea who decides on the nominations or even how much they know about the marketplace but it always seems to be the same old companies that are nominated and the one thing that most have in common is their love of self promotion.

Of this year’s nominations Absolute Invoice Finance and their clients must have wondered if they would see out the end of the year as the previous parent Cattles were in such a parlous state whilst Close and Venture seem between them to be responsible for a disproportionate amount of the complaints that one regularly reads about on forums and blogs around the country.

IGF Invoice Finance is a company that has been top of many people’s lists of “who won’t be around this time next year” for the last two years and there are still mutterings in the marketplace about them.

That leaves just Bibby and what was Eurofactor and I freely admit that I don’t know much about the latter.

I wonder why these companies don’t approach me for a list of nominations 🙂

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Some factoring companies never learn

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A couple of months ago there was a rather “interesting” factoring case doing the rounds being a restart of a printing company that had gone bust defrauding Lloyds TSB in the process with loads of fresh air invoicing and as one would expect it was declined by all of the established factoring companies.

Much to my surprise I heard that this challenge had been taken up three weeks ago by one of the new kids on the block with a funding limit of £250,000

I have since heard that the factoring company are not happy with this partnership and are trying to unload it already giving the reason that they can’t offer more than £250,000 and the company really needs more than that.

The printing company obviously think that the more brokers they put it to increases the likelihood of finding a mug factor to take them on as there are currently at least two of the highest profile factoring brokers touting this around using the line that “this is a good little deal”

Neither broker is incompetent so they must be aware that all is not well with this particular deal and are hoping that the factoring companies that they are asking to look at this are too dumb to notice but that probably won’t be the case and the brokers will end up with their reputations tarnished whilst the new kids on the block will be keeping their fingers tightly crossed that they aren’t going to go the way of their predecessors already