We have had more enquiries for factoring and invoice discounting in the first week of February than we did in all of February 2008 and whilst that should be good news for a broker I find it a little disconcerting that having read through the website which deals with the fact that not all factoring and discounting companies are created equal and some offer a truly appalling service with operating quirks that could cripple some companies cash flow plus a raft of hidden charges that could increase the headline costs considerably – people still telephone and ask “what’s the cheapest rate for an invoice discounting facility”.
There are always people around who are just after the cheapest deal but it seems to be on the increase. On Thursday we took three such enquiries in quick succession. The first was a well established recruitment company turning over £1.7m with a very healthy balance sheet who had received a quote from RBS Invoice Finance including a minimum annual charge of £12,000 and who were so pleased that we found a funder willing to do it for half of that that when arranging a meeting for next week they asked whether they would take the agreemenst with them as they were so keen to proceed. I think that has far more to do with RBS quoting ridiculously high rates in order to pretend to the world that they were actively looking for new business whereas in reality they were ensuring that no-one would take up their offers.
The other two were a recruitment company turning over £1m who was obviously contacting every factoring company in the telephone book and will probably end up with whoever quotes the cheapest headline rates and a distributor also turning over £1m who’s quote from Lloyds TSB I managed to better but who wanted to leave it until next week when he was having a meeting with his accountant which is probably a euphemism for scouring the market place.
Luckily Thursday wasn’t all about rates as we also had an enquiry from a loss making company turning over £6m who were about to sign an invoice discounting agreement with one of the independents but didn’t want to sign a personal guarantee as they thought that having been established for 30 years with 800 customers and being limited to only a 50% advance that a PG was a bit too belt and braces.
Luckily at least one factoring company on our panel agreed with them and came up with an in principle offer with a higher funding level and no guarantees.
Just to round off a busy day the scaffolding hire company turning over £500,000 with applications for payment was fairly easy to place.
It’s just a shame that more people don’t take more notice of the operating differences between different invoice financiers as they could be so keen to get the lowest rate that they end up paying a higher cost – after all £700 for an audit visit mounts up if they visit several times a year