Invoice discounting

October must be the month for awkward customers

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We were approached by a company earlier this month looking for a combination of trade finance and invoice discounting as they had just received a substantial contract that they would have difficulty in funding.

Whilst I’m sure we would have no problem placing the business in principle this chap refused to divulge the name of his company, the name of the customer or any other details whatsoever and the only meeting that he would agree to was in a motorway services station.

Number two was involved in the construction industry, turning over a couple of million with only a few major customers. When asked if she could let the factoring company have sight of the contract the toys flew right out of the pram. I didn’t realise that there would be so much work involved said she continuing that she wasn’t sure that she wanted to bother any more.

What makes it worse is that there are still ten more days to go in October

Invoice discounting statistics

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The ABFA has recently released it’s statistics for the half year ended 30th June 2012 and whilst many of the statistics are completely meaningless as they are skewed by the inclusion of companies turning over in excess of £100m there are one or two hidden gems.

The number of companies turning over in excess of £50m using invoice discounting dropped from 573 to 559 ( a drop of 14) whilst the amount of funds advanced to the same clients increased by £621m

Unless my logic is wrong it would imply to me that the much larger discounting clients are finding their cash flows coming under increasing pressure and they are using up much more of their facilities than previously

Factoring and invoice discounting review of 2011

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I guess that it’s been pretty much the sort of year that we all expected, with the factoring industry as a whole pedalling hard just to stand still.

According to the ABFA statistics the total number of companies using factoring and invoice discounting at the end of September was 41,572 which was a net increase of 61 since 1st January.

Interestingly the factoring industry took on 8,000 new clients in the period but lost a similar amount. It’s normal that quite a few of the new factoring clients are phoenix’s of existing clients but my understanding is that less and less companies have risen from the ashes this year.

Stats for the final quarter of the year won’t be out for a few months yet but chatting to other brokers as well as factoring companies it seems that the final quarter has been even more of a struggle with enquiries down and companies taking longer and longer to decide what they want to do anyway.

Over at Factoring Solutions we aren’t bucking the trend with our enquiry levels down on last year but oddly enough we have had quite a good year as the quality of enquiry has been higher and we are getting a higher proportion of deals away even if the lead time is getting longer and longer. In November two different factoring companies both paid away decent deals that first arrived on the scene 18 months ago before prevaricating like mad for a year and a half and finally signing on the dotted line when we had all but given up on them.

I am frequently asked why I haven’t blogged as much this year and the honest answer is that there has been very little to blog about. No factoring companies have gone bust, no new ones have started up and there isn’t much tittle tattle to write about. I notice that a few of my broking competitors have now started to blog but with the best will in the world their efforts seem to be designed to try and boost Google rankings rather than to be read by human beings as the articles seem to be the same “what is factoring” article rehashed every month whereas this blog is actually designed to be read by factoring people and I won’t post just for the sake of it.

There are one of two stories that I have deliberately not run with as most industry insiders already know about them whilst I can’t see it being in the public interest to bring them to a wider audience and to those readers who email me complaining that I haven’t published their responses I would remind you that this is a personal blog and not a forum.

There is just the one rumour lingering that has been around for the best part of the year concerning the supposed take-over of one particular factoring company and I have been told in the strictest of confidence from several sources that the buyer is – a different company each time 🙂

ABFA statistics for the third quarter of 2011 released today

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As usual there are a great deal of statistics that actually say very little as the 251 clients with annual turnovers in excess of £100m per annum obscure the wood quite well.

The overall number of companies using either factoring or invoice discounting has grown by the magnificent sum of 61 since the beginning of the year to 41,572 but lending to those companies has increased by £1 billion in the same period to £16 billion. Interestingly 62% of that increase in funding has come from the £10m to £50m turnover sector and 29% of the increase in the £50m to £100m turnover band.

Whilst total facility limits are shown as well as the total of advances made there is no analysis of how this is split into turnover bands and my guess is that rather than SME’s not taking their full available funding as ABFA like to claim it is actually a few of the £100m turnoevr companies that are skewing the statistics

Demand for Invoice Finance Grows

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Well it is according to a press release sent out to all and sundry by Simply Business. Apparently they are seeing “an increase in small businesses seeking alternative sources of credit such as invoice discounting and factoring as banks refuse to give credit.”

I wonder where they are placing this increase in business as all of the factoring companies that I have been talking to say that new business is flat at the moment whilst the broking community are all looking a bit glum too. Even the ABFA try and put a positive spin on figures that show a constant decline in numbers of SME businesses taking advantage of the various forms of invoice finance.

I have always taken the view that if I have nothing to say, I say nothing – perhaps that’s where I’m going wrong 🙂