Factoring

Receivables Report Intermediary Index

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I had to smile whilst reading the so called “Receivables Report Intermediary Index” today when looking at the various category award winners as one of them is about to become the centre of quite a bit of unwelcome media attention this year due to it’s appalling treatment of clients coupled with a love of termination fees.

It’s not surprising that this factoring company ranks well as the “panel” that voted comprised a number of Insolvency Practitioners (reading between the lines) and this factor is renowned for it’s love of Administrators

Another has been brought to my attention on more than one occasion in the last six months for it’s quite unethical behaviour towards certain clients whilst a third has lost more clients than it has gained in the last year due to it’s poor service levels.

There is no way that I would introduce companies to any of those three but there are actually two on the list that I quite happily deal with although they will never come top in the rankings as they don’t “sponsor” editions of the journal

As a matter of interest no members of The Independent Factoring Brokers Association were involved in the compilation of this index

Silly season must have come early as elsewhere a list of half a dozen “ethical factoring companies” has recently been published which includes two that don’t have much of a track record and aren’t actually traditional factoring companies at all whilst another has only been trading for five minutes and has just a handful of clients.

Whilst I have nothing against any of the three and indeed actively deal with one of them I’m not sure that it’s helpful to draw up a list of ethical factoring companies that only includes three recognized factors plus three from the fringes.

ABFA Code of Conduct

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The long awaited code of conduct from the ABFA has been announced and this will be coupled with an independent system of dispute resolution managed by Ombudsman Services.

Further good news is that the ABFA is also establishing a Professional Standards Council which will be mainly comprised of members outside of the industry, and they will consider issues emerging from the complaints system and make recommendations on actions to further repair and enhance the reputation of the industry.

In theory this is good news but it does depend on the will of the ABFA and it’s members to clean up their acts.

One interesting point in the code is that all factoring companies will be required to include a note in their Agreements saying that a commission will be payable to the introducer which I’m sure won’t cause any heartache but the next clause insisting that each factoring company shall provide full details in writing of the amounts involved and the method of calculation of any future commissions if requested, might cause issues for some of the larger broking outfits who insist on commissions way above the levels that are deemed to be the norm within the industry.

What a load of self righteous drivel

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I was thumbing through a copy of what a Factoring Blog commenter once described as the Hello magazine of the factoring world and was quite astounded at some of the self righteous drivel being spouted, and I was still only on the first page.

The editor was thanking the factoring company who sponsored that particular edition and included such sanctimonious claptrap as “this bulwark of SME finance is being stalked by the irritating and inconsequential” further claiming that “we are honoured to stand with them, facing their detractors with reasoned and robust debate”

Apart from the utter hypocrisy of Hello Factoring referring to The Telegraph as inconsequential I have searched and searched and cannot find any example of them publicly “standing with their sponsor and facing their detractors” with reasoned or indeed with any other type of debate and if the truth be known the only person who has publicly stood with this factoring company and faced their detractors is yours truly.

Perhaps the factoring company in question would like to spend a few grand sponsoring the next edition of Factoring Blog 🙂

Rate swap miss-selling and invoice finance

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It seems that many companies who have been miss-sold rate swaps are loathe to take action as they are concerned that their bankers might not take kindly to being sued by their own customer and could respond by calling in overdrafts etc.

One or two companies have looked at invoice finance as a financial tool specifically to help them move out of the clutches of their bankers in order to allow them to institute proceedings against them without fear of any comeback with one company that we know receiving damages of £390,000 this week from their ex bankers having first of all utilized invoice finance to move themselves to safety.

Factoring Solutions has teamed up with one of the major factoring companies plus a consortium of finance companies and banks that are willing and able to offer banking facilities, asset based lending and commercial mortgages to any company that wishes to safeguard their financial position before entering into “discussions” with their current bankers about compensation

 

Factoring companies and Administration. Another tale of woe

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I had a company referred to me last week which had been placed into Administration by their factoring company a few days before Christmas.

The company had not been particularly happy with their factoring facility and had been asking about early termination when out of the blue the Administrators came marching in the week before Christmas.

The director does not know why the factoring company put them into Administration as the factors have been vague and the court documentation was missing but one of the reasons given was that the director had been elusive and the factors had been unable to speak to them for some while. They seem to have completely ignored the fact that the so called elusive director had been in constant email contact with another of the factor’s directors for some while.

The company is a subcontractor in the construction industry operating on contracts with Applications for Payment etc yet was factoring with one of the smaller factoring companies not known for it’s appetite for the construction industry.

There are no assets within the company apart from the debts and as the company was relatively small turning over just £500,000 one has to wonder at the point of appointing costly Adminstrators as they already had possession of the only asset.

The Administrators themselves are a firm well known in factoring circles and they have told the company’s directors that if they setup another company to trade again unless they buy the assets off them for £50,000 the Administrators will have forensic examiners crawling all over the old company’s books to find evidence (which doesn’t exist) of wrong doing.

As the assets excluding the debtors aren’t worth anything my guess is that the Adminstrators are trying to put the frighteners on the company otherwise they won’t get their fees paid.

This looks like yet another cautionary tale of a company being needlessly and pointlessly put into Administration by it’s factoring company and from what I have been told the termination fees applied have been quite sizeable.

I have put the company in touch with an insolvency lawyer who is happy to review the whole case to see if there is anything that can be done at this late stage and hopefully when the whole story comes out there will be another story for James Hurley at The Telegraph as his articles generate far more publicity than anything I can write.