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Factoring and invoice discounting news, views, warnings and gossip written for real people and not search engine bots
A friend of mine remarked recently that one particular factoring company provides information for the “recent factoring and invoice discounting deals” section of a certain factoring publication on a regular basis but each block of deals always bears a remarkable similarity to the previous ones.
If you have a close look you will see that they have signed up yet another Northern recycling company so I think that by now they must have cornered the market in the area for this industry 🙂
“Manchester-based personal injury firm Express Solicitors has secured working capital and development finance of ÂŁ3.5m from RBS Corporate after a record fee income performance in 2011.”
The above was part of a press release mailed out to all and sundry by RBS’s PR company and it seems that in an era when SME’s are complaining that banks won’t fund them this British taxpayer owned bank is proud to announce that they are happy to plough ÂŁ3.5m into ambulance chasing.
Even the comment about the company’s record fee income performance in 2011 doesn’t sit comfortably with many of us.
The Financial Times has now got in on the act by reporting on the campaign for regulation of factoring companies but unfortunately they do themselves no favours as the one newspaper that is supposed to understand corporate finance has managed to get it all wrong.
The first paragraph starts off with “A group of business owners pushing for regulation of lenders that provide funding based on company order books has admitted that it is likely to be a more difficult process than first imagined.”
How can one be expected to take an article seriously when they don’t even appear to understand what factoring is.
The next section deals with the comments made by one particular insolvency practitioner who is trying to convince people that regulation isn’t necessarily a good idea – well shock, horror turkeys are against Christmas. Obviously insolvency practitioners aren’t keen on regulation as many of their more outrageous money spinning activities will be severely curtailed.
The final segment of the article homes in on one particular case where the company owner blames a specific factoring company for putting his company down but only factoring insiders will understand from what sketchy details have been given that the company was involved in fresh air invoicing. Perhaps he read the Financial Times article and thought that it was acceptable to factor his order book.
I am all for regulation and for much greater tranparency in the relationship between certain factoring companies and the insolvency profession but come on, this company was defrauding his factors and deserves everything he gets
I got into factoring purely by chance as I spotted an advert in the London Evening News for a sales ledger clerk and went along for an interview with Martin Forman the then Company Secretary of H&H Factors Ltd who explained exactly what factoring was, telling me what a growth industry it would be and how beneficial it would be for me to get in on the ground floor.
I must admit that I didn’t really understand what he was talking about but having a look around the general office I noticed that no-one was doing any work as the staff were all chatting to each other with one young lad having his feet up reading the paper and eating a sandwich but despite not having a clue what the company was doing I thought that this was just the place for me and so my career in factoring started way back in 1966
In those days there were only a handful of factoring companies with the market leaders being Griffin Factors, Credit Factoring and International Factors being the subsidiaries of Midland Bank, Nat West and Lloyds Bank respectively with Barclays Factoring bringing up the rear and struggling to make an impact. The clearers were joined by a few independents led by Alex Lawrie Factors which was set up by a tea merchant but about to be acquired by Lloyds Bank, H&H Factors and Arbuthnot Latham Factors.
Life was very different for the bank boys in those days as whilst nowadays the banks are accused of forcing factoring and invoice discounting on their customers like it or not, in those days the bank managers were loathe to let their own factoring companies anywhere near their precious customers.
On the technology front – nowadays we live in an era where mobile phones contain computer chips more powerful than the mainframes that the banks used to use and whilst the basic concept of factoring has hardly changed in the intervening 46 years the technology has changed tremendously.
In today’s high tech offices if anyone wants to know a client’s availability all he has to do is to press a button, similarly all transactions and statistics relating to the account are also available at the touch of a button but it wasn’t always like that.
Sales ledger accounting was done via mechanical accounting machines made by NCR and Burroughs with those at H&H Factors being of the Burroughs Sensimatic variety.
Every invoice factored had to be laboriously entered onto the customer’s ledger card and statement by manually picking up the previous balance and posting the new invoice on top.
The credit controller’s bible is the aged debt analysis which in those days was prepared manually on a large sheet of analysis paper. After inserting the balance the account had to be analysed by hand into the correct aged columns and when it was all finished the various columns had to be totalled and then crosscast (which invariably it didn’t)
At least we had the benefit of some modern accounting machinery to help us with the ageing with the trusty Brunsviga being my weapon of choice.
If any invoices were disputed we had to record the details of the dispute on a form F179 and send the top copy to the client for him to comment on and return. If the client didn’t reply within a set period we would re-assign the debt by handwriting a form F80.
I only mention that as I am continually astounded by my ability to remember form numbers after 46 years yet I can’t remember what I had for dinner last night which I’m sure many of you will suggest is down to senility setting in.
My other abiding memory of factoring in the sixties is that everyone in a position above that of lowly clerk was referred to as Mr and even when I left after five or six years in 1971 it was Mr Forman that I said goodbye to and although I followed his progress for many years I don’t think we ever met again so although life in general became more informal I never got to call him Martin.
Whilst I could ramble on for hours and bore you all silly I suppose that I had better leave this blog entry at the end of the sixties and continue onwards into the seventies with the huge advances in technology including the replacement of the telex machine by new fangled high tech fax machines for another time…
Ian
We had an enquiry last month from a small logistics company who in addition to the funding also stressed the importance of the service levels so we introduced them to one of the smaller factoring companies who have a deserved reputation for the excellence of their service.
My contact made an introductory telephone call and arranged to go and see the company but the meeting was cancelled at short notice as the prospect said that he had suffered a death in the family. Leaving it for ten days or so my contact called again to be told that unfortunately whilst he was away his boss had signed up with another factoring company 🙂
Whilst his lame excuse did make me smile it is annoying when a prospect specifically asks for top class service levels then signs up with someone not exactly renowned for service as if he had asked for the cheapest possible costs I would have directed him appropriately