We have several invoice factoring clients who operate in the scaffolding industry. They have always found it difficult to find invoice factoring companies who want to lend to them because of the industry that they operate in. However, as an industry scaffolders require cash flow finance because the house builders are slow to pay yet wages need paying weekly. On top of that funding for tubing is hard to come by and often has to be hired in at high rates or bought for cash which only compound the problem.
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Single Debtor Factoring
Single Debtor Factoring can be hard to obtain – especially with any meaningful prepayment level.
There are only a number of invoice finance lenders who will consider a proposal where a client has only one customer. This number reduces dramatically as the required finance limit increases.
There is an argument that lenders should be willing to provide funding against a good quality single debtor such as Tesco and as stated some lenders are more than happy to do so. It does however increase the risk profile and typically they will need the debt credit insured. A major concern relates to disputes – the debtors willingness to pay rather than their ability to pay.
Lenders will often call this type of proposal 100% concentration
Smart factoring Quotes recently received an inquiry from a client looking for finance of £800,000 against a single debtor.
We were able to do a quick review of the market and establish which lenders were able to help. We received a lot of interest in the proposal but most lenders were unable to assist over a level of £500,000.
The proposal was very urgent for a number of reasons and we were able to agree terms with a lender quite quickly which were acceptable to the prospect. We were able to collate the required information quickly and get the facility set up in the timescales required by the prospect.
If you are looking for a invoice finance facility and you only have one customer please get in touch with Smart Factoring Quotes today.
If you are looking for a indicative quote for invoice factoring you can simply go online and visit Smart Factoring Quotes. The site not only offers bespoke indicative quotes for invoice factoring and invoice discounting, it’s aim is to be an online resource for business owners. The site offers business owners who currently use invoice factoring advice on how to minimise costs and also on what other facilities may be available to them.
For a business that is new to invoice finance it offers advice on negotiating a new facility, case studies, details of the different types of facilities and it also offers a phone number where they can speak to a member of the team. The team have decades of experience within the industry but importantly also have experience of running SME’s in the ‘real world’. As such the Smart Factoring team can have encountered most scenarios before.
The option of online ‘self help’ allows business owners to develop knowledge of the invoice finance market and it’s products with a view to helping them negotiate their own facilities. They can also check the offers they receive from lenders via the online quotation system. Alternatively they can pick up the phone and access the team directly.
Looking at the site there are an impressive list of testimonials from business owners and accountants which is comforting.
If you are looking for an invoice finance facility why not visit Smart factoring Quotes today.
06
Sep
We have often been approached by businesses that work in the IT sector who raise invoices in advance for maintenance contracts or in stages for large projects.
Unfortunately lenders have always been wary of funding such businesses as it was felt that invoices would not be paid by customers in the event of business failure.
We are happy to announce that we have access to a new product targeting the IT sector.
Whatever your function within the IT sector, if you are looking for finance get in touch with Smart Factoring today.
I recently met Philip Padgham on a corporate day with a firm of accountants. Various people were singing his praises and a contact of mine asked if I would try using his invoice finance company Partnership Finance.
I had a chat with Phil who explained that as a finance company they were fast moving and decisive. They also claim to offer an excellent level of service. Yes, I had heard it all before but as it happened I had a client who had been let down at the last minute by Absolute Finance. (Strangly Absolute Finance had taken 2 months to decline a deal based on information they had been aware of on day 1.)
Anyway, I presented the opportunity to Phil and he visited them the very next day which was a friday. They then surveyed the deal on the Monday and approved the deal by credit committee on the Wednesday. The client is delighted. I am impressed. From first visit, through to survey and then on to formal approval by credit committee in 4 working days is fantastic.
A big ‘thumbs up’ for Phil Padgham and his colleagues at Partnership Finance.
I was reading the posts on a forum hosted by the FSB about factoring and invoice discounting. As someone who is actively involved in the invoice finance industry it did make me cringe a little.
There were numerous posts from business owners and the odd person in the invoice finance industry including myself. The most passionate posts were from the owners of businesses that had got into difficulties and ultimately failed. They described how invoice finance companies had appointed advisors charging huge fees, appointed insolvency practitioners charging huge fees and/or had charged huge termination and collect out fees.
It does seem as though some invoice finance companies will levy these hefty charges when a client is in danger of failing. They are legally entitled to do so but I am not comfortable with the manner in which they do so.
The rationale behind collect out fees is to allow a lender to apply resources to effectively collect out their position. I have no issue with that. However, this fee can often be as much as 10% of the ledger value rather than the amount outstanding. In some instances the workload may well justify such a fee but these instances are few and far between. So why are lenders charging these fees? Well in short and in my opinion because they can.
The forum had some post putting the blame at the door of independent invoice finance companies which I thought was unfair. Some of them are guilty of this but not all and the banks are also actively involved in this practice.
By way of a recent example I had a client who owned a Scaffolding business and they were using invoice finance from a large bank provider. For good reasons they were restructuring and trading through a seperate limited company which in effect would be a phoenix. This had been well managed and the invoice finance facility had been run down to zero and cash was available to pay creditors. All good news and honourable. Unfortunately the bank concerned had a very black and white policy and could not finance the new company as it was technically a phoenix. As such the facility was ceasing and there was to be no ongoing relationship so the bank took advantage of the terms and conditions and charged a fee of 10% of the ledger value as a collect out fee. That resulted in a fee of £16,000 for collecting out what? Well, nothing as they had no outstanding balance. Who would have thought I had scaffolders calling bankers cowboys?!?
What is the effect on these businesses and their directors? Well in most cases I suspect the impact is nominal as any money collected in and not charged in fees would be distributed to creditors including HMRC. However, in some instances directors may well have benefited and my scaffolding client was a good example – it was money that would have ended up in their pocket. Either way I think it is morally wrong to charge for a service that has not been provided.
This practice is gaining publicity and tainting the name of a very good industry that is a valuable source of working capital for many thousands of UK businesses.
28
Aug
Factoring is a valuable source of Factoring is also an opportunity to outsource the credit control function of the business. This ensures that the debts are collected in a methodical and effective manner which reduces your borrowing costs and reduces the risk of non payment.
The credit control does mean that factoring is more of a service than a finance facility and as such can differ dramatically from lender to lender. Factoring companies will use a variety of methods to chase outstanding debts. Some invoice finance lenders offer the most basic service of sending out automated letters and statements which in itself is at least a methodical approach which should produce satisfactory results. Other companies will add to this basic service and will telephone each debtor to chase the outstanding invoices. This more hands on approach should be more effective and will allow disputes to be highlighted quickly.
It is important when comparing quotes to establish what service you are receiving for your money.
Factoring also offers an advantage to a lender over an invoice discounting facility. Over and above the additional income generated by a factoring facility it also reduces the risk of a lender. They are closer to your customers and in the event of failure the invoice factoring company is better placed to collect the debt as they have always been actively involved. By having contact with customers they can also verify that invoices are genuine and the risk of fraud is reduced.
So factoring offers benefits to both invoice factoring companies and borrowers alike.
Factoring in Ireland has become increasingly difficult in recent years as the economy and banking industry in particular has been hit hard.
Arguably when companies require cash flow facilities the most the Irish banks have not been in a position to help except in the most straight forward of cases.
There are however, several invoice factoring companies in Ireland who have stepped in to fill this void. As such Smart Factoring Quotes Ireland was set up to help Irish businesses find the lender best suited to meet their needs.
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