Factoring Arrangements – Factoring Solutions Success Stories

Electrical contractor turning over £20m Electrical contractor turning over £4.5m Electrical contractor turning over £450,000 Roofing contractor turning over £3m Roofing contractor turning over £550,000 and unhappy with his existing factoring facility New start dry lining company forecasting sales of £250,000 Several carpentry and joinery companies turning over £100,000, £900,000 and £2m respectively A groundworks and excavation company in a CVA turning over £5m Sundry other businesses involved in construction including a structured cabling contractor,…

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The Brumark Ruling

Prior to 2001 the banks grudgingly lent on overdraft to the SME sector, safe in the knowledge that their fixed & floating charge placed them near the top of the pile in the event of receivership or liquidation as the proceeds from the outstanding debts would be payable to the fixed charge-holder. 2001 was a pivotal year for SME funding as a decision by the Privy Council in the Brumark case stated that a company’s…

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Changing Factoring Company

Many factoring companies make promises that they cannot keep and we now seem to be spending increasing amounts of time rescuing companies from poor factoring relationships and placing them with factoring companies that actually offer the flexible, professional and personal service that they promised. Small businesses often come to us for help changing Factoring Company. The main reasons that companies are not happy with their factoring companies include the following:- They were promised a professional…

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Factoring Company Defrauded by Client

There was an interesting article in a North West regional newspaper this week about a couple of company directors who have been banned from running a company after being caught out defrauding a factoring company. Administrators were appointed to the textile company two years ago and it would appear that during their routine examination of the books they uncovered a substantial fraud and the company directors later admitted that they had raised fraudulent invoices in…

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Treasury Leads Inquiry into Invoice Abuses

The Government is investigating “abuses” of the administration process by invoice finance providers. The Treasury and the Insolvency Service have begun the inquiry into the unregulated industry following an investigation by The Telegraph that revealed that lenders are exploiting company failures at the expense of the taxpayer, business owners and other unsecured creditors. Entrepreneurs, industry insiders and a campaign group told this newspaper that some invoice finance firms are abusing contractual fees and their preferred…

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Factoring 101

What is Factoring Factoring is where a company submits copies of sales invoices to the factoring company who in return makes available a pre-agreed percentage (up to 85%) of the value of the invoices for immediate drawdown. The factoring company maintains the sales ledger on behalf of the client and will contact the customer for payment of the invoices if and when they become overdue. When the customer has paid the debt to the factor,…

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How to Compare Costs on Factoring Quotes

Here Ian Johnston of independent broker, Factoring Solutions, looks at how one offer on your factoring costs might look like a good deal but a closer look at your figures, and knowing what to look out for, can save a company a lot of money. This is a factoring cost comparison using a company with an annual turnover of £750,000. Its customers take an average of 60 days to pay and it is looking at…

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Factoring and Invoice Finance Breaking Records

Figures for the third quarter of the year show that companies using factoring and invoice discounting facilities generated sales of more than £71bn which is the strongest ever quarterly performance and a 14% increase on the same period last year. The 43,000 companies using invoice finance had total advances out to them of £17.4bn which again is a significant increase over the comparable period in 2012 and compares very favourably with bank lending to the…

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Factoring Companies ‘Profit’ from Company Failures

Factoring companies are “profiting” from putting clients into administration at the expense of the taxpayer and other creditors, according to allegations made by business owners, industry insiders and a campaign body. Brian Moore, who leads a group calling for the regulation of asset-based lending, said he is preparing a submission to the Parliamentary Commission on Banking Standards which, he claimed, revealed the “unacceptable behaviour” of some invoice finance providers and brokers. The group argues that…

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The FAQs you Should be Asking Factoring Brokers and Factoring Companies?

The above was a question asked on the ukbusiness forums recently and I have reproduced the answer given as I think that it may be of interest. “You’ve actually got the wrong end of the stick as most factoring companies will pay commissions at about the same rate so there is very little incentive for the broker to pick one over the other on commission rates alone.” The real problem with the broking market is that…

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Finding it Difficult to Leave your Current Factoring Company?

There are many reasons why one would want to change their factoring company with the main one being that the facility isn’t performing as well as expected. In times of old the ABFA published the rules and regulations that their members agreed to abide by and one of those rules was that a factoring company wouldn’t put undue obstacles in the way of an unhappy client that wanted to leave. Historically the factoring company would…

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Stupidest Factoring Sales Pitch of the Week

“Company Liquidation Set For Dramactic Rise If Debt Factoring Is Not Utilised” (sp) Must rank as one of the daftest and most inaccurate sales pitches that I have come across. This was the interpretation put on a press release from R3 the insolvency trade body that said that business insolvencies are likely to increase substantially next year. The rather desperate blogger’s interpretation was that:- “some of the biggest reasons for business failures is lack the…

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Factoring where the Director isn’t a Property Owner

I had an enquiry yesterday from a company that had been trading for five years and had been with a bank owned factoring company for the last two. The company was profitable and turning over £750,000pa but had complaints about the service levels from their factor. 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…

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Miss-sold Rate Swaps – Invoice Discounting Solution

Companies that feel that they have been miss-sold rate swaps are in a difficult position as they seem to be unwilling to take action against their bankers for fear that the bank might withdraw it’s support. Some of these companies are looking at factoring or invoice discounting as a way to fund their businesses in order to reduce their reliance on their bankers prior to taking action against them for compensation with the more cautious…

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Factoring for Federation of Manufacturing Opticians Members

The Federation of Manufacturing Opticians (FMO) has recently announced a scheme for it’s members claiming to offer preferential rates for it’s members in conjunction with Bibby Financial Services. Whilst not wishing to cast any aspersions on the factoring company who have just taken advantage of an excellent marketing opportunity in these difficult times we do not believe that schemes like this where an association is tied to a single factoring company is in the best…

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Small Factoring Company Acquisition on the Cards

According to the rumour mill, Cattles have acquired London Scottish Bank. Whilst both companies are probably best known as sub prime consumer lenders they both acquired a pair of factoring companies along the way. Cattles Invoice Finance is one of the larger independents whilst London Scottish Invoice Finance has earned a fine reputation for it’s service levels so it will be a shame if these service levels were to disappear in the quest for increased…

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Another Factoring Company for Sale ?

It has been widely reported that London Scottish Bank is thinking of selling it’s factoring subsidiary in order to raise funds to repair it’s own capital base which seems to be no longer adequate under the new Basel 11 rules. London Scottish Invoice Finance is one of the smaller factoring companies but has an enviable reputation for service levels coupled with some innovative products and aggressive pricing and we hope that if sold it will…

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Factoring Industry Still Growing Strongly

Factoring and invoice discounting companies advanced more than £13billion in the first quarter of 2007 with close on 48,000 UK companies now using this method of finance. Manufacturing has historically been the largest industry sector in the 40 years that factoring has been around in the UK but it has finally been overtaken by service industries and although there is no further subdivision published it would be our guess that recruitment agencies would be the…

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The State of the Factoring Marketplace

The factoring marketplace seems to be changing with far less activity happening than in the past. Companies looking for working capital to fund expansion are few and far between as few companies are expanding at the moment and with many of the major factoring companies losing large numbers of clients due to their inability to ride out the recession, the overall market is contracting. Most of the factoring companies are reacting to the changing marketplace…

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Ultimate Finance Increase Business by 50%

Ultimate Finance PLC have just announced their preliminary results for the year ended 30th June 2006 and they appear to have made substantial growth with 131 new clients being taken on in the year bringing their total number of clients to 230. Client sales financed was up 49% from £82.5m in 2004/05 to £123m. Turnover for the period increased by 52% to just over £3.5 million and their profit was up from £21,000 last year…

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