I have now had a look at a factoring quote provided by RBS Invoice Finance to a prospective client and quite honestly I find their proposed charges outrageous.
The company have a turnover of £300,000 with five customers all equally spread and they have no history of payment problems. RBS have quoted for a recourse facility so there is no credit insurance involved and what’s more they want the client to do their own credit control. The minimum factoring commission of £6,000 pa is at least one third more than available in the independent sector and as if the outrageous setup fee of £1,500 wasn’t bad enough there is also a renewal fee payable on the anniversary of the facility of 1%
I have been in the factoring industry a long time and this is the first time that I have heard of a renewal fee but the real problem is that probably 95% of RBS Invoice Finance clients come directly from the bank and it never occurs to them that there might be alternatives that would offer a better deal so they just sign on the dotted line.
If this case is representative of RBS rates I would suggest that anyone considering a factoring facility with them should look around for an alternative quotation as they are very, very uncompetitive.
In this particular instance we will be saving the company about two thirds of the setup fee plus another third of the ongoing fees plus all of the renewal fee as none of the factoring companies that we deal with charge so outrageously.
Ian
I have a similar story re: RBSIF. In 2007 they were presented by our bank as a suitable option to funding the expansion of our business. The offer looked OK. The reality was fees that were probably triple what we are paying now, truly incredibly awful credit control, bad accounting, incorrect statements to clients, legal action when not required, a damaged reputation with our clients, loss of clients as a result and finally an unannounced reduction in the facility after we started to complain. So don’t simply consider the financial cost of factoring – albeit this is important – also consider if the factoring company understands your business and can actually provide effective credit control. Would I personally recommend RBSIF – not in a million years. Since then I’ve experienced both Clydesdale and Bibby and they are both streets ahead.
I am trying to get out of my agreement with RBS and low and behold there are endless fees in there terms and conditions. In the end it has cost us well over £2000 to leave. This has been the most costly and useless waist of our time and money. I would like to make a complaint (I have already done so to RBS) however I would like to take this further. If anyone knows who to take this to please let me know.
For details of the fees in more detail please email me. I recommend no one ever go with this company.
Regards
Jim
Unfortunately there is nowhere else to turn as whilst the banks are regulated the factoring subsidiaries are not.
There are many companies who have been charged much, much more than your quoted figure in order to get out of an inappropriate factoring facility so you may have got off lightly although i don’t suppose that you see it that way at the moment