Is your funder restricting your growth?– more Simplicity rhetoric

One of my pet hates is factoring companies or in this case recruitment company funders who engage in knocking the opposition especially where in this case the rubbish spouted by Simplicity just isn’t true.

A couple of years ago Simplicity published an article on their website entitled “Beware the hidden costs of recruitment finance” which should have been filed under the heading Fairy Tales as it mainly fiction and I took them to task on the Factoring Blog back in 2016

They’ve done it again last month by republishing a similar article this time entitled “Is your funder restricting your growth?” which again contains much grade one garbage.

factoring mythFirst Simplicity state:-

Many factoring providers will attempt to seduce you with headline rates, but this is likely to be a false economy for several reasons.

Firstly, you will pay interest on the amount advanced to you and there will be an additional amount to cover the finance provider’s administration costs (i.e. service fee).

The truth is that the factoring companies that offer a dedicated recruitment finance facility mainly do so with just a single charge with no additional charge for interest.

factoring mythSecondly Simplicity state that:-

Secondly, the longer it takes your client to pay the more expensive your factoring facility becomes, with interest continually accrued over time.

As stated most factoring companies don’t charge interest on their recruitment finance facilities.

factoring mythThirdly Simplicity state that:-

Thirdly, perhaps most important of all, factoring by default imposes a concentration limit – the maximum amount the provider will cover for a single client. If you work for a large client, that accounts for as much as 20% of your total monthly billings and the concentration limits in place restrict you from gaining access to those funds, your business is going to run into some major problems

That was true 20 years ago but that hasn’t been the case for a number of years with many factoring companies happy to fund single customers as long as the customer is creditworthy and the paper trail good.

factoring mythFourthly Simplicity state:-

Suppose your factoring provider offers you a limit of £75k or even £150k – at the outset that may seem attractive. However, what happens once you hit that cap?

Quite simply you won’t get any money paid to you that week, which means you cannot pay your workers or other essential expenses either. All of which could see the recruitment business you have worked so hard to build and grow fall by the wayside within a matter of days. Can you really afford to take that risk?

Again that is a load of rubbish. It’s not in the factoring company’s interests to restrict their clients funding as the higher the client’s turnover the more commission the factor earns.

Facility limits tend to be reporting limits and once that limit is approached the factoring company’s relationship manager will write an internal review and invariably the facility will be increased in line with their client’s sales projections.

To prove just how untrue most of the above is I would suggest that any recruiter looking for funding and back office should obtain a quote from Simplicity if they so wish then feel free to contact us and we will introduce you to a traditional factoring company that has a specific recruitment finance offering that will offer a bundled fee with no separate interest charge, no long term commitment but one month rolling contract only, no minimum fees and who will fund all of your debtors no matter what proportion of the total your largest customer is (subject to creditworthiness) with the icing on the cake being that in most cases they will also be cheaper than Simplicity.

Contact Factoring Solutions on 01827 707680 to see what our small panel of expert recruitment finance factoring companies can offer.

Beware the hidden costs of recruitment finance – Simplicity rhetoric

Simplicity is one of those recruitment finance companies that often try and have a dig at traditional factoring companies as a means of self promotion and I have noticed in the past few weeks that they have published a couple of articles that try to promote themselves by pointing out negatives in their competitors’ offerings that are unfortunately often just not true at all.

There are several factoring companies that offer dedicated recruitment finance facilities and as a large proportion of the enquiries received by Factoring Solutions are for recruitment we have relationships with many of the providers and deal actively and frequently with three of them.

factoring mythFirstly Simplicity claim that:-

Many factoring providers will attempt to seduce you with headline rates, but this is likely to be a false economy for several reasons.

Firstly, you will pay interest on the amount advanced to you and there will be an additional amount to cover the finance provider’s administration costs (i.e. service fee).

In traditional factoring there will normally be two charges as Simplicity have stated but the factoring companies that offer recruitment finance facilities will have just the one charge and frequently that single charge will be lower than that available from Simplicity.

factoring mythSecondly, the longer it takes your client to pay the more expensive your factoring facility becomes, with interest continually accrued over time

Again this is incorrect as with recruitment finance facilities (which is what the title of their article was about) there is a single charge levied on sales and slow payers will not result in higher costs.

factoring mythThirdly, perhaps most important of all, factoring by default imposes a concentration limit – the maximum amount the provider will cover for a single client. If you work for a large client, that accounts for as much as 20% of your total monthly billings and the concentration limits in place restrict you from gaining access to those funds, your business is going to run into some major problems – will you have enough set aside to pay out what you need to? can your business even continue to trade without these much-needed funds?

That may have been true a few decades ago but not nowadays and Factoring Solutions has been placing clients with factoring companies offering recruitment finance facilities to companies that only have a single customer so the concentration will be 100% which makes the above comment slightly ridiculous as well as patently untrue.

factoring mythSuppose your factoring provider offers you a limit of £75k or even £150k – at the outset that may seem attractive. However, what happens once you hit that cap?

Quite simply you won’t get any money paid to you that week, which means you cannot pay your workers or other essential expenses either. All of which could see the recruitment business you have worked so hard to build and grow fall by the wayside within a matter of days. Can you really afford to take that risk?

The above comment is a bit naughty as that just doesn’t happen. Every finance provider will set a limit but most recruitment finance providers will be happy to increase that limit to accommodate growth within your company as their aim is to assist your growth and not hinder it.

Thumbs Down from Factoring BlogIt’s a shame that Simplicity feel that their marketing effort should be aimed at knocking their competitors as not only are the majority of the negatives that they have talked about just not true but they have left out perhaps the most important aspect in the whole arena of deciding which recruitment finance provider one should go with and that is the service levels on offer and judging by the comments made by their disgruntled clients when they contact Factoring Solutions it isn’t hard to see why.

By all means get a quote from Simplicity then feel free to contact us and we will introduce you to a traditional factoring company that has a specific recruitment finance offering that will be cheaper than Simplicity, won’t have a separate interest charge and won’t hamstring growth with ridiculous concentration limits.

Contact Factoring Solutions on 01827 707680 for friendly and professional advice free of charge

Payroll finance problems at Lloyds?

Rumours have surfaced that all is not well at the payroll finance division of Lloyds Bank Commercial Finance as we hear that the back office administration was outsourced to a third party which has resulted in what was described to the Factoring Blog as “an unholy mess” with invoices not being sent out to customers at all for six weeks plus other administrative mess ups resulting in quite a few very unhappy clients.

One factoring company’s telephone hasn’t stopped ringing with unhappy clients wishing to transfer away from Lloyds and they have already taken on a few of their recruitment clients with a few more in the pipeline and that’s just the one factoring company.

If any of the recruitment finance clients of Lloyds are unhappy with the service levels please don’t hesitate to contact us and we can very quickly introduce you to a factoring company that will offer a first class factoring and back office facility that won’t let you down

 

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