Factoring

Ultimate Finance takeover confirmed

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The take-over bid was announced this morning and Ultimate Finance will become a wholly owned subsidiary of the Renovo Group PLC which commented that it wished to become a prominent provider of credit facilities for UK SMEs and that the Renovo Board will continue to evaluate further acquisitions and alternative routes to access funding for SMEs at commercial rates which are accretive to the strategy.

I’m still uncertain why a cash rich shell company would wish to get involved with a factoring company that is struggling to make any real headway in a market sector that is itself struggling. Renovo claim in the offer document that they will be “continuing to innovate the business model through a more technology focused platform” but as anyone who knows Ultimate will be aware any problems that they have in the marketplace aren’t technology based but are more to do with continually changing direction coupled with a revolving door policy with sales staff that has now probably made it difficult to attract good new salesmen

Another interesting comment in the document was “The recommended acquisition of UFG is the first step in implementing Renovo’s strategy of building a new force in SME lending and growing considerably in an underserved sector” I don’t know who was telling them that the factoring market is underserved but whoever it was probably has a rapidly expanding nose as most of us insiders feel that there are too many players in a market that has been going nowhere for the last few years

Ultimate Finance takeover

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Ultimate Finance has received an approach from Renovo Group PLC that may or may not lead to a takeover bid in the legalese jargon of the Stock Exchange.

Ultimate have confirmed that discussions have been on going with Renovo which is a non trading company with a net asset value of £27m and a previous history in the pharmaceutical industry.

To the outsider this is a very unusual fit as Renovo is a shell company with no expertise in any form of finance let alone a niche product like invoice finance and it does make me think why, with a history in pharmaceuticals they have decided that a factoring company is the way forward for them.

It makes me wonder if there is more to this than meets the eye and if Renovo Group are in league with someone else who does have industry expertise – but there again I’ve always loved a conspiracy theory 🙂

ABFA Code of Conduct

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All of the factoring companies that we deal with are committed to the new ABFA code of conduct with training sessions being held to ensure that all staff members fully understand the Code.

The factoring companies are contacting their introducers to confirm that they are fully compliant with the code and outlining the terms on which they will do business with the brokers. We have already seen and responded to a fairly lengthy agreement from one of our panel of factoring companies and have today received a much shorter version from another factor which I thought I would reproduce in part so that those sceptical onlookers could see how seriously this matter is being taken:-

“As a member of the Asset Based Finance Association (ABFA), XYZ Factors is committed to implementing the new Code of Conduct which comes into effect from 1st July 2013.

The aim of the Code is to ensure that clients are treated with honesty and fairness with all facilities operated in a professional and transparent manner.

With these principles in mind the code requires that:

All terminology relating to notice periods, termination fees and collect out fees must be clear and transparent. All collect out fees will need to be justifiable and the ABFA Member may have to provide confirmation of how the collect out fee was calculated.

Furthermore the Code does not allow for any payment to a third party of any portion of a collect out fee.”

Needless to say Factoring Solutions is more than happy to subscribe to those ideals and will in fact only deal with factoring companies who are fully committed too

Business Money gone bust yet again

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It seems that whenever there isn’t much happening in the factoring world ABFA publish some statistics or else Business Money goes bust as they are the two staples that I can rely on to provide me with a story. This time it’s the latter as Business Money has gone bust for the second time within eighteen months.

Was it really only last January that I wrote about the magazine publisher craftily switching names with an off the shelf company in the hope that no-one would notice it’s demise. This time they didn’t bother and on 22nd May 2013 the Administrators were called into Business-Money.com Ltd whilst on the same day a charge was registered by a factoring company to Business Money E-Mbrace Ltd and it’s business as usual.

The statement of affairs of last year’s bust company showed a deficit of close on £500,000 of which the good old taxpayer lost out to the tune of £127,200 but the most interesting point made was that the rights to the Business Money name were hived off in 2008 which means that the trading companies can go bust willy nilly without ever losing the rights to the name.

I await a copy of the Administrators report of this year’s bust with interest and wonder who the big losers are this time round.

I hope that it’s not us again

Government urging more companies to look at invoice finance

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Vince Cable has commented that Britain’s businesses can’t grow without access to funding and they need alternatives to traditional forms of bank credit and the Government actively wants to see a shift to non bank lending.

Bank funding to the SME sector has shrivelled since the banking crisis creating a cash flow crisis that is stifling small firms.

Mr Cable’s comments co-incided with the launch of a guide to alternative sources of financing, published by the Confederation of British Industry (CBI) which includes factoring as well as other forms of invoice finance.

Hopefully more companies will look at factoring as a viable alternative to bank overdrafts and loans now that the Government has indirectly given this form of finance it’s seal of appropal