Case Study 15 – factoring and credit insurance

Factoring and Credit Insurance
The company banked with HSBC so took what they assumed to be the logical step of approaching their factoring division first of all who offered them a non recourse (insured) facility but then completely negated the value of the credit insurance element by refusing any insurance cover on their major customer despite it being a substantial PLC.

The company were unhappy at the idea of paying for a fully credit insured factoring facility that hardly provided any of the required insurance so they consequently approached Factoring Solutions for advice. We suggested that they would be probably be better off talking to one of the more commercially minded independent factoring companies who would offer a competitively priced recourse factoring facility with a separate credit insurance policy bolted on.

In addition to the advantage of the extra flexibility offered by the independent factoring company and separate credit insurance policy approach, the bank owned factoring companies are not renowned for the generosity of their credit insurance limits and frequently a good credit insurance broker with his intimate knowledge of the market will know which underwriters to approach for each specific type of deal and can often arrange better individual limits.

Even so we were somewhat pleasantly surprised when the insurers agreed a credit limit of £400,000 on this particular company that HSBC had declined to cover.

Unfortunately it’s common practice when looking for finance to approach the bank without looking around to see if there are more suitable alternatives and in this case we sourced a fully insured factoring facility at the same cost as they would have paid their bankers for a “halfway house” facility that didn’t actually give them what they needed.

We probably have more years of factoring experience than any other specialist factoring broker so why not contact us on 01827 707680 for an informal chat without any cost or obligation to see what we can do for you.

What do you think?