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It was while reading another forum I realised the frustrations business owners have with modern day bankers. In short they are constantly trying to cross sell business owners products they either don’t need or can get elsewhere for cheaper. However, when it comes to lending money they are rarely anywhere to be seen.

The modern banks that populate our high street today consider themselves as retailers and this is a message delivered to the employees of these banks on a daily basis. The buzzwords such as ‘cross selling’ are the main focus of all the banks and this theory is supported by businesses who apply for loans to help grow their businesses only to be bombarded by calls to sell them insurance.

It is fair to say that anyone that you meet face to face in a bank or speak to on the phone will have some sort of sales target. These targets drive behaviour and unfortunately advice.

The redundancy policies of the banks over the last decade have seen experienced bankers and lenders replaced with young sales people. The decision makers are a minority of people in an ivory tower they call the credit department. As such you are relying on the report that your ‘sales contact’ will submit to this credit department. Far from ideal as your contact will have spent more time attempting to sell you insurance than they have understanding your business and it’s real requirements.

The invoice factoring industry is not altogether different. It remain sales focused but on the whole it concentrates on products it understands and delivers. Another important difference is access to decision makers. Within the invoice finance industry it is possible to access decision makers and as a business you can really benefit from this.

High Street Collections is a new collections company with a new approach based in the North East of England but with a national presence.

So why is the approach new?

Well their approach is professional and not heavy handed. It also involves visits to non payers along with the usual letters and telephone calls. While this may not be new, the approach is solutions focussed and this is new. High Street Collections focus on meeting with a debtor to establish if it is a case of ‘can’t pay’ or ‘won’t pay’. From there they look to establish the validity of any disputes and then find a solution as to how the debt can be paid. The key is stressing to the debtor that the debt is not going away and as such it is better to find a palatable solution.

Their success rate in collections is 87% and this incorporates collections from debtors that range from private individuals to major corporates.

High Street Collections act or aim to act for SME’s, finance companies, factoring companies, insolvency practitioners and banks.

It is important to remember that the benefits to clients include:

  • No upfront legal fees.
  • Improved cashflow from the recovery of debt.
  • Improved profitability by reduction of bad debt.

PayFactory is the new name of Calverton Business Support which provides invoicing, finance, credit control and payroll management to recruitment companies. Their aim is to become the market leader in recruitment finance and back office support.

Essentially it allows a recruitment company to outsource the areas they do not enjoy and concentrate on recruiting. It also offers peace of mind that their workers will be paid correctly and on time.

We have been told to expect some heavy marketing and PR in coming months.

It does however sound as though work still has to be done on the website to allow for uploading of schedules online and viewing of reports online.

If you wish to consider a facility from payFactor please contact Smart Factoring Quotes today. We can explain their offering in more detail. Importantly we can also explain the other options available to you from other providers.

If you have been declined for an invoice finance facility what can you do? Well I guess to provide an accurate and short answer I would need to understand why a facility had been declined however we can look at some general advice:

  • If it is because you operate in a particular sector such as construction it is worth looking for a specialised lender.
  • If it is because your business is too large or too small for the lender you approached use the market place and look for an alternative that actively targets businesses of your size.
  • if it is because of adverse credit history of the business or the directors look at alternative lenders but it is wise to be totally upfront and honest. Explain what happened, why it happened and why it won’t happen again.
  • if it is because of financial performance look at other lenders. Not all lenders are concerned with financial performance.
  • If you have looked for invoice discounting but have been declined perhaps you would qualify for another type of facility such as CHOC’s or factoring.
  • You could always consider asking for a reduced prepayment level.
  • Consider asking a lender to cap your facility to limit their risk.
  • Can you offer additional security to show the lender you have confidence in the business?

It is important to remember that all lenders have different criteria so it is worth shopping around. Smart Factoring Quotes would be happy to undertake a market review and advise you of your options.

HMRC are trying to agree 9 month repayment plans with businesses for PAYE and VAT arrears. However, it is possible to negotiate better and more reallistic terms.

In my dealings with businesses as an Invoice Factoring broker I come across a lot of businesses who have some form of arrears with HMRC. Often the invoice finance company will put a condition in their offers that the business must have a time to pay agreement in place for these arrears.

A time to pay agreement is a formal repayment plan that has been agreed by HMRC.

Unfortunately HMRC in recent months have been very aggressive when negotiating these and have been advising everyone that the maximum term is 9 months. This is often unrealistic and in most cases simply postpones the winding up petition.

So why do businesses agree to these repayment schedules that they can’t meet? I think often they are feeling the pressure. They are typically not used to dealing with the big beast that is HMRC and are worried they will wind them up. The requirement from the invoice finance company to have a repayment plan in place also adds to this pressure. A delay in obtaining the finance could mean business failure and as such there is relief in agreeing to any repayment plan.

I was speaking to a company that specialise in negotiating better terms for these agreements and they are negotiating between 18 months and 3 years. Their emphasis is in proving the repayment plan is what will work and is realistic. Their track record helps as they have a relationship with HMRC but it can be done by individual businesses. It is important to have cash flow forecasts to support your argument but it is well worth standing your ground to reach a conclusion that is ultimately more beneficial to both parties.

Invoice discounting v Overdraft facility

This is a question that I am often asked and unfortunately it is a purely academic question for most businesses. Due to certain test cases relating to floating charges banks are no longer comfortable to lend on overdraft where the major asset within a business is the debtor book. On that basis invoice finance is typically the only option available to a business.

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Invoice Factoring Companies within the UK range between the arms of the high street banks such as HSBC through to small family owned outfits such as Factor 21.  Most of them offer the same basic services which are factoring and invoice discounting and some offer specialised services such as confidential factoring and trade cycle finance. However, it is important to remember that the same product from different lenders can be a very different proposition. It can differ on many levels such as price, actual prepayment level, the way you operate the facility and notify the invoices, the way the service is delivered by the lender, etc..

There are roughly 45 invoice finance companies in the UK so there is a good choice.  Typically depending on the unique needs off your business there will be a lender that is best suited to your needs. The problem is in identifying that lender. Unfortunately the factoring companies are sales focused and as such all will try to convince you that their offer is best for your business.

If you want some impartial and independent advice contact Smart Factoring Quotes.

Invoice Finance is the generic terms that describes both the industry and the product that provide finance against invoices that a business raises to other businesses.

Under the umbrella of invoice finance there are various products including:

Invoice Discounting – this is where a finance company will provide finance against the invoices raised by a business but the responsibility of collecting the debts in remains with the business itself. This type of facility can be either disclosed or confidential.

Factoring – this is where an invoice finance company purchases the debt from a business and not only provides finance but also provides the credit control function – i.e. they chase the debts. Disclosed factoring is by far the most common form of finance however confidential factoring can be sourced.

CHOCS – this stands for ‘clients handles own collections’ and operates in the same way as a factoring facility. However, the  factoring company allows the client to do their own credit control.

Beyond this there can be recourse and non-recourse facilities for all these types of facilities.

When choosing your facility it is important to consider what you require from the facility and then it is worth speaking with an invoice finance broker to see what facilities will best meet your needs. It is important to remember that each lender has it’s own criteria and capabilities.