I mulled it over in my mind and decided to introduce them to one particular company partly as they were fairly close but to my surprise they turned it down as the director didn’t own his own property. Whilst I can understand the reticence to deal with “men of straw” if it’s a new company and nothing much is known about the individuals but in this case we are talking about a well established company who had been factoring for the last two years with one of the big boys.

I contacted a second factoring company who also have a reputation for the quality of their service but whom I didn’t give this lead to initially as my contact was a couple of hundred miles away and asked whether they would look at a company who had been trading for five years, factoring for the last two but where the director didn’t own his own home – to be told quite refreshingly that in the circumstances they would be delighted to look at it.

Yesterday’s enquiry was from a company that had been factoring with RBIF for 10 years and had always enjoyed the relationship until recently, complaining that not only had the facility limit been cut but that the collection effort operated by the bank had worsened with telephone chasing cut out in favour of computer generated letters that I think we all know are a complete waste of time and money.

I introduced this company to a factoring company that don’t continually move the goalposts and offer an exceptional service and when I discussed the case with my contact there I laughingly opened the conversation with “I have another disgruntled Royal Bank Invoice Finance client for you”

Most of the factoring companies are reacting to the changing marketplace by becoming far more selective in the business that they take on and also increasing rates to compensate for the increased risks

The first was a new start recruitment company and having discussed his requirements extensively we introduced them to a factoring company known for their high service levels having stressed that they also offered a refund of all fees paid if the company were unhappy with the service levels.

When they later informed us that they had decided to go with an alternative factoring company that they had sourced elsewhere we were somewhat surprised as we had never heard of them. A little investigation turned up the fact that they had rather an “interesting reputation” and quite possibly it won’t be too long before that company becomes another of the insolvency statistics by the time the factor has finished with them.

The second enquiry was somewhat larger and told us that they had an appointment with the factoring subsidiary of their bank but having read our website they were a little concerned about the possible pitfalls and thought that they might do better with an independent.

We introduced them to an independent factoring company who we thought would be far more suitable for them but the factor had difficulty making contact with them as he never returned calls.

Finally today he was told that a meeting wouldn’t be wortwhile as they had just signed up with the bank’s factoring company. I wonder why having asked whether something more suitable existed he didn’t bother to make time to talk to a company who may well have been more suitable, especially when it is something as important to a company’s health as a factoring facility .

The biggest change in market sector so far has been in recruitment which has historically been the mainstay of factors in recent years with quite a few of our enquiries coming from new starts in this industry. So far this year we have received just five enquiries from this market sector which is a much smaller proportion of the total than usual.

The average deal size has increased over last year and although the factoring and invoice discounting companies are looking far more carefully at the risk involved in underwriting new business we have managed to find a home for a steel importer turning over £20m and a manufacturer of extruded window frames turing over £20m with a factory in Poland as well as a whole host of smaller companies

In addition to invoice finance we have also taken an increasing number of enquiries for trade finance including a wholesaler currently discounting his invoices with one of the independents and turning over £10m a year who wanted funding for purchase orders as well as a watch importer turning over £38m looking for import finance and a publisher of video games with annual sales of £10m who was looking for a letter of credit facility.

Whilst the funders are being considerably more careful than in the past it is still possible to place the more difficult deals as evidenced by the renovator of housing turning over £5m and about to enter a CVA which we found a home for

The terms that this subsidiary of a company owned by the British taxpayer wanted to handle the five customers of this business was a minimum of £6,000 per annum in factoring commission plus an eye watering £1,500 as a setup fee and an even worse 1% renewal fee at the end of the year if they wanted to continue for another year.

Most people would just sign on the dotted line thinking that the terms were pretty much standard but luckily this person contacted ourselves and we were able to put them in touch with an independent who’s costs are likely to be half of that wanted by RBS

The rather desperate blogger’s interpretation was that “some of the biggest reasons for business failures is lack the lack of demand for their product or service or the Company’s ability to have sufficient working capital”

How on earth this rather desperate factoring blogger  managed to drum up his very dramatic headline out of that I do not know but let’s hope that the service that he provides to his customers is of higher quality than his blog posts

At the same time the factoring division of Bank of Scotland was busy telling one of it’s customers who had the temerity to try and leave after being with them for over two years that they could either wait nine months until the third anniversary of their factoring agreement or stump up with a large fee to buy themselves out of it.

It’s interesting to see that in the day and age of easy in, easy out factoring agreements Bank of Scotland are still trying to handcuff their customers to stop them getting away.

It is always a difficult time for the clients of a factoring company that has put itself in the shop window as they try and tidy up their portfolio as many of what they consider to be borderline cases are often terminated and others may see their rates increased in an effort to make the portfolio look as healthy as possible.

Needless to say until matters become clearer we cannot recommend Cattles Invoice Finance to any of our clients as we don’t know what the future holds for them.

Ian