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Factoring Company Reviews

You may recall our previous story about UK Exim Limited and UK Exim Finance. The businesses owed millions to Assetz Capital and Archover respectively.

 

There was an article in the Telegraph about how Mark Runiewicz provided funding via these businesses to a business called Packaged Water Limited which was run by his partner Mary McErlain. The article can be reviewed here: https://pressreader.com/article/281642487623557

 

The administrators progress report for UK Exim Limited filed on 28th September 2020 shows a total shortfall of over £5.5m with over £2.4m of that due to Assetz Capital. You can see the report here: Administrator’s Progress Report

 

Mark Runiewicz and Mary McErlain continue to work together at SC Advisors. Given the potential fraud with UK Exim, UK Exim Finance, Packaged Water and the losses suffered by lenders it is interesting that Mark and Mary continue to work together to advise businesses. They advise that their business, “advises SME companies by arranging funding through the whole supply chain”.

 

Archover describe what happened as a fraud. In a response to an investor on a TrustPilot review, they advise, “The company you refer to is UK EXIM Finance (UEF) not EXIM. The company was not introduced by our parent company. As you are well aware this fraud has affected a number of other lenders as well as ArchOver but our monitoring team was the first to uncover it. UEF had been a legitimate borrower for a number of years until this year. As you are aware from the multiple updates from ArchOver we are pursuing a wide range of avenues for recovery with the full support of Hampden Group, who themselves are also exposed as a lender in UEF.”

 

It will be interesting to see what further action Assetz Capital and Archover take in these matters. It will also be interesting to see what the final outcome is in terms of recovery with UK Exim Finance Limited. The Administrators progress report can be viewed here: Administrator’s Progress Report

 

In summary it advises that at the date of appointment, UK Exim Finance Limited owed £4.74m to Archover. It goes on to say that Archover will “suffer a substantial shortfall”. There is a move to liquidate the business so it will be interesting to see what the final shortfall is. It would appear that Archover may have moved the debt into a separate SPV company and it would appear that they have made some progress in recovering some of the funds.

 

 

 

Invoice finance is now being offered by Investec Capital Solutions. This is after Investec Bank acquired Amicus Commercial Finance from the Amicus Group. Amicus had failed to secure a banking license as expected. As a result, Amicus undertook a strategic review across the group in order to reduce operational costs and ensure that its core short-term property lending business continued to grow. The sale of the invoice finance side of the business was after this failure. It must have been unsettling for staff and clients alike given that Amicus Commercial Finance was only established in 2015.

Invoice finance is typically provided by way of invoice discounting or factoring. It allows a business to access up to 100% of the gross value of outstanding invoices. It is a great source of working capital and smooths cash flow so you don’t need to worry about when customers pay late.

When considering which invoice finance provider to use you should consider 4 main areas:

1. Structure – if the facility is not structured properly it will not generate the cash you expect it to.

2. Pricing – the difference between the most expensive solution and the cheapest can be dramatic. It is also important to look beyond headline rates and consider total costs.

3. Service levels – they way you are treated by a lender is important. You are paying for a service and you deserve the best. Things such as stability, staff turnover and general attitude of the lender can make a big difference.

4. Security – ensure you understand what your liabilties are in terms of security requirements.

If you are looking for a factoring or invoice discounting facility why not undertake a complete market review using the simple 3 step form above. That way you can secure the most competitive terms in the market. Whatever your situation there is likely to be a lender that will meet your needs better than other invoice finance providers.

By using our expertise you can ensure not only that you get the best rates but also the best structure.

 

Recently we were approached by a landscape gardener than needed assistance in raising some working capital. The family owned business has issues as they were working for the well known house builders. These clients would take a long time to pay and in the meantime they had to pay their workers weekly.

They had approached their own bank who were unable or unwilling to provide an overdraft facility. They referred them to their invoice finance arm who were unwilling to assist as the business was considered to be in the construction industry as they were required to submit applications for payment to the house builders like any other contractor. From there they had approached several independent invoice finance providers who were unwilling to help for the same reasons. The landscape gardener then approached us at Funding Solutions UK.

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The best factoring company for your business will depend on the unique characteristics of your business and importantly on your own requirement.

The main aspect of any factoring companies proposition is the structure of their facility, service levels and pricing.

Structure of a facility

It is imperative that the facility is structured to meet the needs of your business but some lenders may not be able to structure a facility to meet your needs. Some lenders have a credit policy that will not allow them to finance any debtor that exceeds over 25% of your total ledger. If you have one large customer that accounts for a large proportion of your sales ledger or all of your sales ledger such a lender would prove to be restrictive. You will need a lender that does not have such stringent criteria when it comes to concentration limits. Another example can be exports. Some lenders will simply not finance export sales so if you have export sales or are looking at export sales than you need to consider a lender that can finance those sales. Smart Factoring Quotes understand the capabilities and requirements of each lender in the market.

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I am often amazed at how much disbursements cost factoring clients over and above the ‘headline’ charges. It is not uncommon for some clients to be paying more in disbursement charges than they do in service fee and discounting fee combined.

I was with a client yesterday where this was the case. When I spoke to them about the fees they were very upset about the ‘games’ the factoring company concerned were playing.

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If you are looking for a factoring company then it is imperative you choose the one best suited to your business and your factoring requirements.

Factoring companies all differ in terms of how they structure facilities, what restrictions they impose and of course how they price their facilities.

In a basic level each factoring company offers different prepayment levels and different pricing structures.

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We often get asked to recommend the best invoice finance company. I thought I would look at what makes a good invoice finance company.

In part it is a case of horses for courses. Some lenders are well suited to small businesses while others are better suited to larger businesses. The same goes for different sectors, different geographic locations and different scenarios.

Common complaints with lenders surround poor service levels. I must admit in some cases it is simply because the lender has said no to a client. Sometimes this is justified and in other instances it just seems like a lazy answer rather than doing some work to solve a problem.

Some lenders genuinely pride themselves on top quality service levels and customer satisfaction. This however can be a double edged sword as the same lenders can be described as expensive in comparison to lenders who cut corners and provide a poor service.

Communication is a key factor. As an invoice finance broker I can fully appreciate this. It seems like the most basic concept in any business relationship but I am often left amazed at how many lenders simply fail to return calls or e-mails both with myself and clients.

They say that service is inseparable from the people that provide it. This means that staff within invoice finance companies need to be engaged and happy. This comes as a result of fair remuneration, good training, clear goals and a good environment to work in. Some lenders clearly provide this while I know that others simply don’t. It may be a bit of a generalisation but the lenders that treat their staff properly also seem to be the 0ones that treat their clients properly.

It is interesting to see certain invoice finance providers now using specialist departments to deal with businesses that operate in the construction sector.

In part this is really good news for businesses that are definitely a part of the construction sector. If they are very much entrenched in contractual debt, applications for payment and stage payments then a lot of businesses would not have a suitable cash flow solution. Now they at least have an option albeit an expensive one with low prepayments. That said it is probably structured and priced according to risk although part of me feels in some instances lenders are taking advantage where they feel they are the only lender willing to assist.

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