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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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Smart Factoring Quotes have updated their new website to include a new and improved quotation tool.

As an independent and impartial invoice finance broker, Smart Factoring Quotes are keen to attract businesses looking for a new finance facility or a business looking to review their existing facility.

The new improved quotation tool takes into account the criteria of your business and provides a quotation that is bespoke to your business.

The quotation tool is also now accessible from each and every page on the website.

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.

Confidential invoice discounting is the ideal invoice finance product for businesses that want to do their own credit control and do not want their customers to know that invoices are being funded. Confidential invoice discounting provides businesses with working capital and will prepay up to 90% of the gross invoice value.

Confidential invoice discounting can however be very hard to come by due to the criteria invoice finance companies put in place.

Lenders look beyond the basic invoice finance criteria of selling to other businesses on credit terms and invoicing in arrears of delivery. Lenders will look more carefully at a businesses financial performance and they expect a robust balance sheet. Equally important are the processes that a business employs to collect in outstanding invoices.

 

Invoice finance quotes can differ dramatically.

They can differ in different ways and for different reasons and it is important to compare like with like. We have touched on this elsewhere on this forum and this article is worth a read – http://www.invoicefactoringforum.com/invoice-factoring-quotes-comparison/

However, when considering any invoice finance quote is is important to understand the following:

  • what service is actually being offered. Please remember that a full factoring offer that includes a credit control service and bad debt protection will cost less than a finance only facility.
  • have you considered total costs? different companies charge different fees beyond the headline rates of the service fee and the discounting fee. Some service fees are all inclusive while other companies charge for nearly everything on top of the service fee.
  • What is the quality of the service? Remember you get what you pay for.
  • Is the structure of the facility right for your company? If not then no matter how cheap it is you are wasting your money.

I feel it is important to find the right structure and then properly evaluate total costs to allow a genuine comparison.

 

Trade finance can be a valuable source of finance that can facilitate international trade. We typically use trade finance along side an invoice finance facility to assist importers.

If an importer has a confirmed order from a credit worthy customer we can provide a letter of credit to a supplier guaranteeing payment. They can then ship the goods. Once received the supplier is paid by the LC. The goods are delivered and an invoice is raised. An invoice finance facility can finance the invoice which repays the trade finance facility. When the customer pays the invoice finance facility is repaid.

The whole transaction from start to finish is financed. This allows small businesses to accept large orders they would otherwise have to turn down because of lack of working capital.

I see a lot of clients who insist from the outset that they want an invoice discounting facility but most of them don’t actually know why.

Invoice discounting is available and importantly it is more readilily available than it used to be. However, factoring is the easier facility to obtain is it represents lower risk to the lender.

So what can invoice discounting offer?

Confidentiality – yes invoice discounting can be confidential but some companies insist on a disclosed facility. Factoring, however, can also be a confidential facility or a disclosed facility.

Control – some companies prefer to keep the credit control in-house rather than outsourcing to a factoring company. So invoice discounting allows a business to maintain control over the credit control function. However, so does a CHOCS facility which is a type of factoring facility.

Cost – many feel that invoice discounting is cheaper. Certainly for larger businesses I would agree. However, at lower levels of turnover there is probably not a lot in it.

Rather than deciding that invoice discounting is what you want I think it is important to consider the structure of your facility, the characteristics you want and then the costs of such a facility.

Construction factoring is a topic that we have covered several times on this forum.

It is a sector that struggles to find suitable forms of working capital finance as banks are reluctant to offer overdraft facilities and invoice finance companies are uncomfortable with the risks associated with the construction industry.

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