Factoring in the hidden costs

As well as a poor ledger management service pushing up the overall costs, some factoring companies have a raft of hidden fees and we have come across charges of £80 for the telegraphic transfer of funds as well as one factor who had set an unusually low facility limit with the promise that it would be reviewed on payment of an additional charge of £2,000

factoring company selection process

selecting the factoring company Factoring company material used for marketing is generally very similar no matter which factoring company is conducting the sales pitch. They will all tell you that you should sign up with them as they offer a fast, flexible solution including unrivalled personal service.

How likely is that to be true? Does a clearing bank offer a service that is either fast, flexible or personal to the SME sector? If not, why would it's factoring subsidiary differ. Selecting a factoring partner isn't as easy as it first appears as they all offer the same product on the surface but in reality there are fundamental operating differences between the various factors which is where we come in.

Factoring Solutions is a specialist broker with probably more years of industry experience than any other. We know which factors are unable to make decisions quickly, which ones are so understaffed that their sales ledger management and credit control is appalling and which ones’ despite claiming to operate a “flexible and personal service” are actually governed by a strict rule book.

Our years of industry experience are available free of charge as we make no charges for either advice or for introducing companies to the most appropriate factoring company for their particular circumstances.

Potential factoring clients looking for the cheapest can be easily mislead as the actual cost of factoring can end up being very different to first anticipated.

Some factors (including many of the major bank owned names) have a credit control service that is so poor that the debtors end up taking much longer to pay and therefore the cost of factoring will end up significantly higher than first thought as the interest element will be much higher.

Another factor might have quoted a slightly higher commission rate but will end up cheaper in practice as their credit control is more effective. We have explained the financial cost penalties of signing up with the wrong factor in our factoring cost comparison

Factoring Solutions