Factoring

Factoring and invoice discounting in the UK is now being used by 47,000 companies, generating a combined turnover in excess of £170billion and these figures are increasing quarter on quarter.

Most companies, assuming that all factoring companies are the same, take the simplest route signing up with the subsidiary of their clearing bank without first establishing whether or not there are more suitable options available but unlike most other financial facilities, factoring is the provision of finance geared to a service and that service element is not only highly important but equally highly variable from one factoring company to another and in very general terms the big bank owned factors do not rank well in the service stakes.

The way that the factoring company operates and the quality of service that it offers is so important to a company that it can affect the financial health of that company and therefore selecting the wrong factor can have devastating effects as we will try to explain.

Despite the importance of selecting the right factoring company it seems that many companies using invoice finance to speed up cash flow still find their factoring company by looking in Yellow Pages - which is surely why there are so many factors beginning with the letter A - or asking their accountant or insurance broker, who's probable knowledge of the industry comes from the factoring company salesman who has most recently canvassed him.

It should be straightforward but in reality it isn't and as we have very real concerns with the way that some factors operate we have set out details of the possible pitfalls in the following pages including such matters as "Why some factors appoint Administrators or Receivers to their clients" and "How some factors abuse the Minimum Annual Fee" to "Why some factors offer such a poor service" and "Why the cheapest quote often works out much more expensive in practice"

Please click on the links for details on selecting the factoring company and why the cheapest factoring quote often works out more expensive in practice.