Factoring Solutions case histories
Factoring and invoice discounting enquiries continue to increase quarter on quarter and we have detailed below some of the more unusual enquiries:-
1) The UK subsidiary of an American company with a turnover of $300m sold most of their products on 30 day terms but were in a position to sign a substantial contract to supply a large European company if they were willing to sell on 120 day terms. Most factors aren’t happy with a single debtor and even less so if that debtor is overseas and wants lengthy terms but suffice it to say that the legal agreements for a an invoice discounting facility for one overseas customer are being drawn up at this moment.
2) We were also approached by a company that supplied medical reports to solicitors in support of accident claims etc. They had a tight cash flow as the solicitors didn’t want to pay their accounts until the cases had been heard in court and that could take up to 18 months. Normally factoring companies will only finance an invoice for four months or in exceptional cases 6 months but we were able to source a facility with one of the major names that incorporated the benefit of 12 months credit and this will give the company sufficient funding to allow them to expand sales significantly.
3) The next unusual case was a publisher of video games and was a European registered company trading in the UK and supplying product to UK, Europe and USA. Most factoring companies will not entertain a facility with a company that is not registered in the UK but despite the unusual nature of this deal we managed to twist the arms of one of the majors to come up with an offer.
4) The fourth unusual enquiry was more trade finance than factoring as a fairly new UK company was sourcing medical equipment from all over the world and selling it to the World Health Organisation in Africa and despite the fact that the goods never touched the UK we still managed to obtain the offer of a trade finance facility for them.
5) The next enquiry worthy of a mention was a company turning over £4m with the benefit of a non recourse factoring facility with one of the bank owned factors. Having suffered a substantial bad debt last year the factors were loathe to pay the client anything as the balance was above the underwritten limit and it took quite a lot of "persuasion" before they paid out the insured amount. To rub salt into the wounds the factor insisted that an independent accountant be appointed to run the slide rule over the company to ensure that they were still solvent and debited their account with £6,000 to pay for it. The company quite naturally feel that the client / factor relationship has been destroyed and despite the fact that it will cost them a significant sum to switch they approached us to find a replacement facility with a more commercially minded factor and not only have we done this but we have also sourced a six figure trade finance facility to run in conjunction with the non recourse factoring facility as well.
The other interesting aspect to the the above case history is that it was the third company that had approached us within a two month period complaining about various aspects of the service from this well known bank owned factor.
6) The final story is one of failure from our point of view. We were approached by someone with a two year old company turning over £200,000 that had a large exposure into one customer and he was looking for a factoring facility. He told us that he had some experience of factoring as his parents factored their own company's invoices with one of the major bank owned factors but the service they received was poor. We arranged a meeting with a factor renowned for the quality of their service and having provided him with a bagful of references to contact, including over 20 companies that had transferred to them from his parent’s factoring company, they made him the offer of a facility on competitive terms.
Nothing should surprise us nowadays but we were taken aback when told that he had decided to go with his parent’s factoring company as their offer appeared to be cheaper by a couple of hundred pounds per year. As a matter of interest this particular factor pays a higher introductory commission than most but we still refuse to recommend them.
More case histories on next page further factoring news or links to main website detailing the serious reservations that we have with some factoring companies are on the top left.