factoring companies offer such a poor service

Factoring companies don't often manage the levels of service that they advertise and a good many of our enquiries are from companies that are unhappy with their current service levels and ask us to place their business with one of the factoring companies that actually deliver on their promises.

Most companies, having read the marketing material expect that the "professional approach" of the factor's credit control department would decrease the amount of outstanding invoices and they become understandably concerned when the opposite happens.

In many cases the “professional approach” of the factoring company consists of sending out computer generated credit control letters and very little else.

The factoring company's profit relies on generating a higher level of factoring commission income than it pays out in overheads with the major overhead being staff salaries. The more clients that one person can handle, the more profitable the account becomes for the factor but conversely the more ineffective the credit control.

Most factoring companies will only finance an invoice for a finite period, typically until it becomes 90 days overdue then they will require the client to repay their investment in the debt back to them.

They will still keep the debt on their books (without financing it) in exchange for a re-factoring fee, which is typically 0.5% to 1% per month

This can be a lucrative business for some factors, and certainly is no incentive to collect the outstanding debts in quickly.

Our final concern is the way that some factoring companies restrict the levels of funding by imposing artificially low credit and concentration limits so please click on the link to read about the problems encountered with unapproved debts and concentration limits