Factoring companies

GMAC Commercial Finance for sale – now confirmed

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It has now been confirmed that the factoring book of GMAC Commercial Finance has been put up for sale as the parent company looks to pull out of UK operations entirely.

This is rather sad as those of us who have been around a while will know that this company started life as International Factors which was a subsidiary of the then Lloyds Bank and was regarded at the time as the market leader as well as a leading innovater. Lloyds Bank also had another factoring subsidiary in the rather down market Alex Lawrie Factors and it was decided to keep this company and sell off International Factors thus starting the downward spiral from market leader to the relatively unknown that it is today.

It would be ironic if the assets were bought by Lloyds TSB thus completing the circle.

Cattles Invoice Finance shakes off it’s subprime branding

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It may well have been a big surprise to many people but the press release sent out earlier this week announcing that Cattles is shaking off it’s rather downmarket image by rebranding as Absolute Invoice Finance will have come as no surprise to readers of this blog as we gave away their secret way back in April.

When writing the text for Factoring Solutions website ten years ago in 1999 I added the quip that “many companies using invoice finance to speed up cash flow still find their factor by looking in Yellow Pages – which is surely why there are so many factors beginning with the letter A” and it gives me great pleasure that the powers that be at Cattles have heeded my words 🙂

I doubt whether many people use Yellow Pages any more but there are obviously web directories that list factoring companies in alphabetical order so Absolute will jump up the queue with their name change and regain the position that they had when they used to be known as Argent Commercial Services.

I wonder if anyone will now consider changing their name to Aardvark Factors to get pole position

Factoring company of the year silly season is here again – part 2

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I wrote a story in April (http://factoringblog.co.uk/?p=204) saying that whilst I was away sunning myself a raft of different factoring companies had all won awards for being the best factoring company according to a variety of different publications.

Having returned from topping up the tan again I found two more emails in my inbox from companies announcing their recent awards.

The first was from Leumi ABL to tell me that they had been voted “Asset Based Lender of the Year” according to ACQ Finance magazine’s Country Awards for Achievement 2009 and according to the blurb “The accolade is the result of a totally independent poll amongst industry peers”

The second was from those masters of self promotion Venture Finance who were awarded “‘Independent alternative finance provider of the year” by….. wait for it….. ACQ again.

Whilst I’m sure that both Leumi and Venture feel proud of their awards a look at some other of the award winners may put them into perspective as “ALMT – Best Indian Commercial Law Firm of the Year”, “Aviation Law Firm of the Year – Latin America, “Insurance & Reinsurance Law Firm of the Year – UAE”, “Shipping Law Firm of the Year – Hong Kong”, “Shipping & Maritime Law Firm of the Year – UAE” and “Specialist Law Firm of the Year – Aviation – UK” were all won by the same company – Clyde & Co

Is there anyone who hasn’t won an award from these people 🙂

Has anyone successfully sued a factoring company for inadequate performance

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We had an enquiry last November from a company who had a successful relationship with an independent factoring company but had been tempted away to one of the bank factors with talk of cheaper rates.

Within 3 months the unapproved debts had risen from ÂŁ700 to over ÂŁ40,000 and it became apparent that despite paying for a full credit control service the factoring company were actually not doing much at all so the cost of the facility had risen whilst the lack of cash flow due to the increase in unapproved debts was slowly strangling the life out of the company.

I introduced the company to one of the independents who are known for their excellent service levels and thought that would be the end of his nightmare but unfortunately that was not to be the case. The new factor was never able to buy out the investment of the bank factor as the lack of credit control had left the ledger in an unholy mess.

As the factoring facility was plainly not working the company stopped sending invoices to the factor and and has been struggling to self fund for the last few months. Speaking to them today it seems that the outstanding factored debts now total over ÂŁ160,000 all of which is overdue and unapproved.

The company now wish to take legal proceedings against the factor for non performance on the basis that they paid them for a full sales ledger service including credit control that the factor has failed to provide.

Although a factoring agreement will be worded in such a way that the factor is not responsible for anything I’m sure that would not hold up in a court of law if it could be proven that they were negligent but has anyone successfully sued a factoring company for inadequate performance?

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Factoring Blog review of the first half of 2009

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When reviewing the first half of 2009 I started by looking back at comments I made at the beginning of the year in connection with my expectations for the factoring market as well as general comments.

My comment that “I guess that with the banks’ reluctance to lend money and the general state of the economy it is only to be expected that enquiries for factoring and invoice discounting would be running at high levels in 2009” proved to be miles out and whilst Factoring Solutions did receive a record number of enquiries in January, that didn’t last long and the enquiry levels drifted downwards to it’s current very poor level.

It would seem that rather than using the banks’ reluctance to lend as a reason for turning to factoring and invoice discounting the SME sector has decided that in these uncertain times they don’t want to commit themselves to a factoring agreement with it’s associated costs if the opportunities for expansion won’t be there.

Talking to other brokers it would seem that most are fairly quiet with the exception of those owned and operated by insolvency practitioners who are busy with pre packs of existing factoring clients that have failed or other companies that need factoring to provide working capital for the restart.

The only other sector of the broking community that has done well in the first six months of the year are those that have built up strong relationships with the bank owned factors by dint of introducing companies to their own bank in return for a fat fee. Now that the banks have decided to move the goalposts they have found themselves with a large number of clients that no longer fit their new criteria and those clients who find themselves surplus to requirements have been handed over to the banks’ pet brokers to find them new homes.

Highly lucrative work if you are of that mindset but here at Factoring Solutions we run an ethical broking service where the needs of the customer are paramount.

If the ABFA stats are to be believed (and I have my doubts on that score) the figures for the next quarter will be interesting as the number of clients will have gone down again as more and more fall by the wayside.

It would seem that those factoring companies that were a little choosier in the past are the ones that are suffering least at the moment as whilst their books are still contracting the rate is much slower than average. It is the factoring companies that used to operate on the basis of “If it moves sign it up and if it doesn’t move still sign it up” that are suffering more at the moment with much larger numbers of client failures with their consequential impact on staff time as well as bad debts.

Most factoring companies are now looking much closer at new business propositions with such things as single debtor deals much more difficult to place and those with concentration problems also being studied more carefully too.

continued….

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