Factoring

Termination fees on factoring facilities – justified or ripoff?

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I was approached by a company yesterday who had given notice of termination to their factoring company to be told that the factor wished to levy termination fees as the client hadn’t drawn down as much of their funding line as had been anticipated and a figure of £1,500 was what the factor told them would be charged.

The company is turning over £200,000 per annum and was drawing down £20,000 of funding instead of the £30,000 that the factor anticipated and was paying 2% over Libor for the priviledge.

Assuming that the factoring company make a turn of 2% on the funds that they put out that would equate to £200 loss of income on the £10,000 over a whole year so I can’t see how a charge of £1,500 can possibly be justified.

My personal feeling is that the charge is extortionate and trying to squeeze extra fees out of a company that has fulfilled it’s contractual obligations is bringing the whole factoring industry into disrepute.

I won’t name and shame quite yet as the charge hasn’t been finalised but I did suggest that the client might mention as part of his negotiations that the broker charged with finding a replacement factor is the “bloke that writes the factoring blog” as hopefully that may cause them to rethink their policy.

Liquidity / Bank Santander now booting out their clients

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It seems that having purchased a factoring company specialising in smaller and riskier clients Bank Santander now don’t want them and are giving them notice.

Having received an enquiry from the second Liquidity client within a week the factoring company that I passed them to said that they had also received several more through other channels.

One does wonder why on earth they bought this particular factoring company if that wasn’t the sector of the market that they wished to be in – it must have been the tax losses 🙂

Bank Santander enter the UK factoring market

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Bank Santander have entered the UK factoring market not with a bang but with a wimper. The Spanish banking giant has been sniffing around the many factoring companies for sale for some time and were rumoured to be the frontrunners to take over Cattles Invoice Finance until getting cold feet and have instead plumped for the little known Liquidity Ltd a small factoring outfit based in Birmingham.

I have always been very dubious of recommending any of my clients to Liquidity as it is run by the same person that used to be the Chief Executive of Euro Sales Finance until it was rescued by Royal Bank of Scotland in 2001. Prior to being taken over by the bank Euro Sales topped the league tables of independent factoring companies appointing Receivers to their clients.

In 1999 and 2000 Euro Sales Finance accounted for one in five of all Receiverships appointed by independent factoring companies which was a horrifying statistic and one that has ensured that I never deal with any factoring company that has any of their old directors in a management position.

Action Coach – scurrilous rogues or not?

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“Ray Moore is the Managing Coach in the ActionCOACH Chelmsford office. He is an energetic and dynamic coach to both business owners and fellow coaches. In the words of one of his clients “Coaching is only as good as the coach! Ray Moore is an excellent coach.”

Ray trained as an accountant but he quickly realised his destiny lay in the cut and thrust of commercial life. His career has encompassed a wide range of industries including manufacturing, property, retail and distribution.

Over the past 14 years Ray has successfully built his own businesses. In May 2001, he sold his last £6million turnover business to a FTSE100 company for above sector PE ratio.”

The above is quoted directly from his own website but if anyone wants a look at this dynamic man’s website this link may be of interest:-

Does it seem at all familiar? Well it should to many of you as apart from a new six word title it is lifted word for word from my website. One would have thought that a company like Action Coach would have the resources to create their own text without having to resort to stealing mine .

Would you trust a company that is happy to steal the intellectual property of others. I know I wouldn’t 🙁

Venture Finance rumours

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The grapevine has been full of rumours about Venture Finance being the latest target of Deutche Bank’s attempt to break into the UK factoring market but it has recently come to the ears of the Factoring Blog that having got as far as due diligence they have suddenly lost interest as apparently they weren’t too keen on some of the structured lending deals that they looked at