I had a telephone call last week from a very nice sounding lady who wasn’t at all happy with the conduct of her factoring facility and was desperate to make alternative arrangements.

She told me that the company had an exposure into one customer with perhaps £250,000 of the £800,000 annual turnover going to that one company who weren’t the quickest of payers.

The existing factoring company were originally happy to fund that customer up to 85% but had recently reduced it to 50% and now wanted to eliminate the funding to that customer entirely. I wasn’t quite sure why as I checked it out during the telephone call and it seemed to be a substantial company and a good credit risk. I asked what reason the factoring company had given for not wanting to fund this company and she said “none”

She told me that the company were fabricators and when asked, said that all invoices were raised at the end of the job with no stage payments or applications.

I recommended a factoring company who were well known for the quality of their service based on what I had been told.

Having spoken to the factors and asked them to make contact I did a company search on the prospect and was surprised to find that the company name that she had given me had gone bust three months ago but assumed that the factor would get to the bottom of it.

I was rather surprised when the factoring company telephoned me the following day to tell me that he had a long chat to the husband who informed him that the business was all subject to JCT contracts which was why the existing factor had reduced the initial payment to 50% which was a level that they would continue to fund at and that the limited company name that I had been given had gone bust due to contractual problems on a substantial job where the customer had refused to pay.

It seems that the only facts that the nice sounding lady had got correct were her own name and their telephone number and when I spoke to her on the following day I suggested that in the circumstances I recommended that they stay with their existing factors and try and make it work as I probably wouldn’t be able to source anything significantly better.