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I recently set up this forum with a view to sharing some insight into the invoice finance industry with business owners who are already users of invoice finance or invoice discounting.

On another site I was criticised about using the term forum and it was stated that this was a blog about factoring and invoice discounting.  It was also implied that I was only using this blog/form  for self promotion.

In part all the comments were true but I would like to claify what the Invoice Factoring Forum is about. I feel that businesses deserve a better understanding of how invoice finance works as a facility, how invoice finance companies operate, the benefits of such facilities and also the potential pitfalls. The site is aimed at being constructive and positive with a view to benefitting business owners seeking such a facility. In my role as an invoice finance broker I see many scenarios and also see various problems arsie which I have to sort out and as such I thought I would share my experiences (both positive and negative) for the benefit of others.

As I am posting opinions then I accept that it is perhaps more a blog than a forum but at the same time I would welcome posts and discussion from business owners who are looking to ask questions and share experiences for the benefit of others. These posts can be positive or negative feedback about invoice finance and the companies that make up the invoice finance market however all I ask is that they are constructive with a view to helping other business owners. On that basis I welcome discussion and feel that it is in essence a forum.

The site is new and the format is not very user friendly but the content is genuine and we are working to improve things. As it is new it also lacks comments and discussion which only serves to ehance the feeling it is a blog so for that I apologise.

I am an invoice finance broker and I am proud of the service I offer clients. I offer independent and impartial advice to businesses with a view to explaining to them what options are available to them. I explain the pros and cons of each option and ensure my clients understand the total costs of the each facility along with their security and administrative obligations. From there I allow them to make their own informed decision about what is best for their business. One of these options is always not to take up any of the facilities I have suggested and I always respect that as only the owner of a business can make that decision.

I feel that my posts on here are balanced and offer a genuine resource to business owners who are looking for additional advice.

If I have used the wrong terminology then I apologise but my motivations remain good.

5 Responses to “Factoring Blog or Factoring Forum”

  1. In response to a post I made on the FSB Forum relating to Factoring and Invoice Discounting linking to my post above I received the following response. It is a valid response from an FSB member who clearly has had experience of factoring companies.

    “QUOTE //The site is genuinely aimed at providing business owners with insight into the types of facilities that have been mentioned and the pitfalls that have been described //UNQUOTE

    Ianster, I have visited your site and I can’t find any of the pitfalls as described by many posters to this post? You say your site is a genuine effort and provides insight including pitfalls. Could you tell me where, on your site, you mention all the hidden charges that factors forget to tell you about before you sign up because I couldn’t find that? I would have thought that that at least should be in large red ink across the top of your site or at least ‘READ THE SMALL PRINT ESPECIALLY RE THE CHARGES YOU PROBABLY WON’T HAVE BEEN TOLD ABOUT’.

    I think there’s enough pitfalls from the posters on this site for you to expand your site three times over and I’m sure your potential clients would benefit from others experience. Why doesn’t your site at least have a large link to this forum where your potential clients can read about others experience themselves? Or perhaps even some extracts. Could it be that you don’t do this as it might put some of your clients off? Tch Tch, how cynical of me.

    The Factors contracts usually consist of many many pages and should any one use the argument ‘Well you should have read it before signing it’ then I’d say to not only read it but to fully understand it you need a Lawyer to explain exactly what it means the factor can do if things go wrong – or just because the factor has a change of heart for whatever reason suits them. And then of course its all written in language designed to be ‘interpreted’ by their hot shot fancy lawyers and even if you have an opposing argument you probably wo’t have the 100k needed to pay for the fancy lawyers especially because the factors have all your money

    Some pitfalls might seem more obvious than others so if you do decide to make your site content genuine then after you’ve described such as that perhaps you could go on to describe what a ‘participating connected individual’ is? I wouldn’t have known and neither would I have believed the consequences but when a daughter of the firm paid some bills from her personal bank account she became a connected participant and when the firm hit troubled water and the factors wanted their racked up costs they sued the daughter and took her horses when she couldn’t pay them

    Another pitfall that isn’t easy to spot is where their terms are worded in the extent that they can change practically anything whenever they want to. For example – they sign a firm up with a turnover of 2 mill per annum. Most of the firms invoices are interim i.e. for work spanning 3 months they produce an invoice each month end. Suddenly the factor decides they will no longer factor interim invoices. The firm has given 60 day terms to its client which means they actually get paid nearer 90 days. Month 1 the factor gets an invoice for 100k which they won’t fund but they will collect their charges including a penalty for it being an invoice outside of their terms as they say the firm should not now be issuing interim invoices (It’s supposed to do 3 months work and only issue one invoice at the end because that’s what the factors have decided). The factors charges include a minimum payment each month so even though all the invoices are interim and non fundable the company is still paying around 2k per month + the penalties and all sorts of other things. Month two the firm issue another invoice for 100k and the factor collects his charges and penalties. The firm has had no money from the factors. Month 3 the firm completes the work and issues the final invoice for 100k. Great – now the factor can pay up? Think again. The factor still won’t pay the first two invoices because they were interim – even though the whole job is now complete. Not only that but they won’t fund the final invoice because – you guessed it – it doesn’t cover the entire works! (in case you’re not keeping up that is because of the previous two interim invoices). As each 60 days transpire the client pays the factors the 300k and the firm eventually get £285k or thereabouts. The firm had to hit its overdraft hard so its been paying around 13% for not having the funds from the factor and turned away at least two jobs because it was too short of cash to fund them and was on stop with its suppliers

    At least with an overdraft you know where you are but with factors they can sweep the rug from under you at whatever time they choose and if it kills the business well hey, they make a ton load of more money and get a few free horses as a bonus, so what do they care?

    Feel free to put my post on your web site “in order to give other business users a genuine insight into some of the pitfalls”

    • HI, I have to agree with the comments from this post. We contracted with a factoring company earlier this year. We read the contract and were fully aware of what it contained. At the outset we established with the factoring company how our work was verified and accepted by our clients (we are a service provider). This was deemed acceptable and at the start of the contract we passed over a number of invoices along with the agreed Prove of Delivery. Two weeks later the factoring company moved the goal posts and decided that our existing POD was no longer acceptable and wanted to impose a system that impinged on our clients’ and our privacy. At the time we explained why it wouldn’t work and asked why they had decided to move from the originally agreed format. The answer – no answer. Only that in order for them to continue providing funds we had to use the new method. We refused. Over the following months we ended up jumping through hoops to obtain money. We also had to contend with innacurate and creative accounting on their part including ‘Reserving’ funds because we hadn’t managed to reach an agreement with HMRC over paying some outstanding tax. Bear in mind that despite the huge range of powers our factoring company gave themselves in the contract ‘Reserves’ weren’t provided for. When asked on what contractual basis they could do this they back-tracked like mad and tried to claim it was a disapproved invoice. As we were totally fed up with how they operated and the fact that they were costing us money for very little service we decided to use this ‘abuse’ to terminate the contract. On notification of this, via our solicitors, they immediately made claim and demanded immediate payment for all of invoices they held, both from ouselves and our clients. Note: around half of the invoices weren’t due ie within the standard payment period and they had not advanced any funds to us against any of them. Since then the majority of the invoices have been paid to the factoring company by our clients. Have we been paid? No! They refuse to answer or respond to any communication we might attempt to get our money. Their solicitors have been pestering our clients directly even though, as mentioned before, some of the debts weren’t due to be paid. This has caused us some embarrassing moments on the telephone trying to explain the situation. Current status: Still no funds from the factoring company even though we terminated on 31/11/2012 and it is now 20/12/2012. Obviously, this company like to play by their own rules and don’t like to be held to the contract if it doesn’t suit them. Now, I accept that this post doesn’t go into all of the nitty-gritty but you can take it that everything I have written is true and is supported by evidence. So, be warned, this particular company is a master at ‘bait and switch’, which is frowned upon by most ethical businesses. What you have to be aware of is that factoring companies are not regulated by the FSA. Yes, amazing isn’t it, but true, which means that any recourse you may need to take has to be done by you through the courts. Although in our case I did some research and determined that what they have done is ‘theft’ and that is a criminal act. The name of this company (which will no doubt be removed by the owner of the site): SME Invoice Finance, Sheffield.

  2. Personally I think the issues described above relate to construction factoring.

    On that basis it is worth reading:


  3. Michael Gallagher

    Hello I just find factoring very expensive in general and it cuts into my profit margions quite significantly.

    Does any one have any other alternatives ?

  4. Using Bibby Factoring – I would advise any small business to avoid like the plague/ They are not interested in your business or you all they want to to is rip off customers. they missold the products, did not discuss any charges and are at the moment taking 12% a year of our business.
    Its disgraceful when tey are ripping off hard working businesses, they will wothout any warning remove your cashflow or your customer credit limit, they will disapprove without even informing you/

    As far as i am concerned the are just a bunch of loan sharks

    If your thinking of Factoring look elsehwere there re a lot of companies who look after there clients unlike Bibby

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