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.