Success Story failed by Factoring Subsidiary of High Street Bank
Last week we had an enquiry from an importer and distributor of furniture who despite having a successful relationship for three years with the factoring subsidiary of a well known high street bank was now suffering from cash flow problems.
Their crime was apparently that they had been successful and their sales had been constantly increasing to their current level of £2m per annum. The factoring company in their infinite wisdom had decided to cap their facility on the grounds that the furniture sector was having a hard time and that despite their client’s success they were refusing to increase the level of funding. That smacks to me of a self fulfilling prophesy as the bank by their actions were ensuring that furniture companies will continue to have a hard time.
Luckily there are plenty of factoring companies that deliver on their promises, where 80% means 80% and who are commercially minded enough to see that if a facility limit needs raising due to increased sales, it is a good sign and not a bad one. Hopefully within a very short period this particular company will be fully funded again but with a different factoring company.