Factoring/invoice discounting

Factoring/invoice discounting

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My client is a growing services company, which does a significant portion of its business abroad.

Can anyone recommend a factoring/invoice discounting company that can help?

The company is still in its first year of trading.

Thanks
Robert Mattingly

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By Richard Willis
26th Sep 2005 16:44

Tread VERY carefully!
Hi Robert

As I have posted elsewhere, getting involved with such an outfit is something that requires great caution. The company for which I work (exports 80%+) got entangled with a factor, and the administrative burden was out of all proportion to the benefit accrued.

If you DO find one that seems to suit, check very carefully how they handle such things as disputes (with your customers). Some factors will immediately recall any funds forwarded at the first sniff of a dispute, even though some overseas companies are very adept at raising spurious reasons why they should not pay, either at all or the full amount. Such an event in connection with a substantial balance could have a huge impact on your cashflow.

If you can get it, go for 'without recourse' factoring, whereby the factor approves, and then takes responsibility for, the debts. The dispute caveat above will still, though, apply!

Also, check what their policy is on cash passing through their hands. Some factors insist that ALL funds pass through a bank account which appears to be yours, but is controlled by them. They may, then, charge you for the priviledge of passing on straight cash payments, such as deposits, even though they have not forwarded any funds against the debt, simply on an 'activity' basis!

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By Sonja Lee
27th Sep 2005 16:58

There is a Factor out there to suit you!
Contact the extremely helpful people ay Factoring UK Ltd (01323 411770) or email [email protected] - as they are the UK's largest Factoring & Invoice Discounting brokerage, and will almost certainly be able to find you a deal that is suitable to your business needs.

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