Invoice Finance Brokers should in theory provide advice that is both independent and impartial. In my day to day work as a broker that is my aim with a view to offering advice as to what is best for my client.
There a a lot of excellent brokers in the market place all of who will act in the best interests of clients – and so they should I hear you say.
However, there are a few things that may surprise people looking at using an invoice finance broker.
One of the largest providers of advice about cashflow finance in the UK is actually owned by Bibby Financial Services. On that basis which lender do you feel they recommend more than any other? That is only an assumption on my behalf but you have to question their independence.
A broker that claims to be the largest online broker of invoice finance facilities was recently looking for introductions FROM lenders of clients they wanted to ‘manage away’. This is normal practice but in return they were offering them a new client. ‘Very nice’ you may say but what if it is your business that is passed to that lender simply to be used as a pawn. Why did the broker recommend a certain lender to you? Not because they were the best lender for you but because the broker involved owed the lender concerned a favour!! That is no way to conduct business.
Another major invoice finance broker offers services to the invoice finance lenders such as audit and survey services, collect out services, etc.. Lenders who are kind to them in terms of work will typically receive clients in return.
It could of course be argued that brokers place business to lenders where they have the strongest relationships – certainly if you are owned by a lender the relationship is fairly strong!!
The point is that any business using a lender should ask how independent and impartial they are. As with anything if you go in with your eyes and ears open and ask the right questions you will be ok.
It should also be said that these brokers did not reach the size they are without being successful and that success was built on good advice I have no doubt. The question could be raised as to whether they have kept control over that quality advice or not… but that is another topic..
