Factoring

Ultimate Finance News

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In the last 24 hours I have received two press releases from Ultimate Finance.

The first gave details of their recent introducer jolly where Ultimate apparently took a number of their key introducers to Dubai for an all expenses paid weekend.

“This winter sunshine break saw the group sightseeing and experiencing the culture of one of the most cosmopolitan cities in the world – highlights included a Jeep Safari in the desert, lunch at a 5* hotel overlooking the tallest building in the world, an evening cruise on a luxury boat taking in the beautiful Dubai skyline and the thrill seekers amongst the group also experienced some of the best waterslides in the world”

One of the introducers was moved to state “Thanks to all the staff at Ultimate for a great trip to Dubai and hospitality second to none. I will be getting some more business to you to book my place on the Ultimate 2013 trip”

Whilst another stated:-

“The trip to Dubai was hands down the best incentivised trip I have been on with one of our finance partners. Clearly carefully planned by the Ultimate team, we had a jam packed schedule with lots to do and not at any point did I have to put my hands in my pocket to pay for anything. Everything was catered for and paid for by the Ultimate team, 10 out of 10 guys; I will see you on next year’s trip”

I suppose that it’s naïve to hope that brokers introduce business to the factoring company that best fits their needs not the one that provides the best introducer incentives but I suppose that I’m old fashioned that way.

Amusingly 12 hours later a further press release arrived and this one was concerning the recent placement of shares in order to raise £2.6m. I’m sure that the two events aren’t connected as surely a weekend jolly in Dubai can’t cost that much – or can it?

It’s silly season otherwise known as annual awards time

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Silly season is back again with annual awards being dished out to all and sundry. It seems that the same small handful of companies share the awards around each year with the exception of the NACFB award for factoring and invoice discounting which seems to be won by Bibby every year.

I’m sure this has nothing to do with the fact that they have a Bibby representative on the NACFB board. 🙂

The latest shortlist to be published is probably the daftest one yet as the Institute of Credit Management (ICM) in their infinite wisdom have accepted nominations from the following three companies for their Commercial Finance Provider of the Year award.

Market Invoice
Bank of Valletta
Touch Financial

Touch Financial is of course not a commercial finance provider at all but is a broking outfit with a hardworking self promotions department whilst the other two I guess were nominated by someone with a sense of humour.

The blurb accompanying the press release contained the following masterpiece

“The outstanding quality of entries received for these brand new awards was extremely high and a reflection of the great achievements made in the industry.

The glittering award ceremony will be held at the prestigious Hilton Park Lane Hotel in London, and will provide the winners of the first ever ICM British Credit Awards with exceptional recognition before some of the industry’s most influential people.”

Factoring and termination fees. ABFA response

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According to an article in today’s Sunday Telegraph Kate Sharp the chief executive of the Asset Based Finance Association (ABFA) has claimed that they intend to bring in a new code of conduct in January whilst indicating that the association still haven’t a clue what is going on under it’s nose by it’s members by questioning the extent of the problem that everyone seems to know about except the ABFA

Unfortunately the new code of conduct will be heavily watered down from what many people wish to see as they will not be outlawing the sharing of termination fees with brokers claiming laughably that it’s “against competition law”.

I suspect that the real reason could be found under the list of affiliate members / sponsors of the ABFA on their site who comprise many of the brokers who’s noses are firmly in the factoring trough and are quite happy with the status quo

Factoring and the recent bad publicity

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Most of the industry will be aware of the recent bad publicity that factoring has had in the quality press and of course many will be laughing at the discomfort being felt by one particular factoring company but whilst the so called revelations are obviously damaging to that factoring company the fallout out is also damaging to companies looking at factoring for reasons that may not be so obvious.

Two of the case histories used appear to portray the factoring company in a very poor light but most people in the industry will read between the lines and it was fairly obvious that one of the companies mentioned was pre-invoicing and whilst I’m not sure what the other one was up to there was obviously a major problem there if the company attended a meeting with the factoring company accompanied by a friendly insolvency practitioner.

What is annoying about the recent bad publicity is that there is one particular factoring company that I refuse to deal with as I have severe reservations about their ethics and I believe them to be a company that has profited more than others from the demise of their clients judging from the huge number of complaints that I have received about them. This is not the factoring company that has featured in these press stories

I have no doubt that the salesmen from this factoring company will have downloaded the press stories to their laptops and if they hear that a company that they are negotiating with is talking to the other company they will show them the articles in order to win the deal for themselves with the result that all of this adverse publicity will be helping the rogue factor get their claws into yet more unsuspecting companies.

There are industry practices that I am not happy with and would like to see curtailed and most of them centre round the early termination of factoring facilities whether through the insolvency of the client or through the desire of the client to change factors.

Many of the problems within the industry are actually driven by greedy and unscrupulous brokers who hold the factoring companies to ransom. Some of the insolvency practitioner owned outfits make it quite plain to the factors that if they don’t give them the lucrative insolvency work they won’t receive any leads from them whilst some of the very high profile broking firms insist on such high introductory fees that it makes it unprofitable for the factoring companies to take on their introductions which often leads to them looking at alternative ways to increase their profitability.

Perhaps ABFA could gather the factoring companies together and get them to all agree to a maximum commission level to be payable to introducers which might then result in brokers giving enquiries to the most appropriate factoring company and not the one that pays them the most.

Wishful thinking I know

Lloyds TSB scrap sales incentives

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It was widely reported in the press last week that Lloyds Banking Group are scrapping “all incentives linked to product sales in the latest attempt to clean up bad practices”

I wonder if the announcement will include their factoring and invoice discounting subsidiary Lloyds TSB Commercial Finance Ltd as if they are no longer going to pay commissions on new accounts that is going to affect at least two of the high profile factoring broking outfits who have grown fat on introducing companies to their own bank in return for a sizeable commission.