HSBC Factoring - Credit Restrictions

HSBC Factoring - Credit Restrictions

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I sense something is wrong with my factoring account, but I just cant put my finger on it. After many years use I find on similar or lower turnovers my Discounting account is may be 5 times as large (with concurrent charges) but customers are apparently paying at the same rate or quicker? For Example my daily borowing balance used to move between £20K & £40K now its between £150K & £220K. My customers are not paying 10 times slower.

I also find myself not being able to access all the funds because of a funding generated restriction which they tell me was always there but I never bumped into it before on much higher turnovers.

In addition I never used to get low credit limits on customers meaning I have to fund the balance, but now I have two. So I pay a factor fee but don't get the service in full?

I have asked for the methodology/formula behind all these calculations but I always seem to get fobbed off.

All in all managing my finances using factoring is now getting very hard when it didn't used to be on the same trading levels.

I just cant help feeling that parameters and calculations have changed here without my knowing.

Am I just being cynical or am I about to uncover another Libor type scandal?

Replies (4)

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By Moonbeam
16th May 2013 14:40

You need to get pretty high up the organisation

I have found when calling factor companies on behalf of clients in the past (on much more mundane matters) that the bulk of the work appears to be done by very low level unskilled and unintelligent beings.

I presume your factoring company have a complaints procedure which they should advertise either on their website or somewhere else. I suggest you start there and work your way along. I suspect they will do their best to try to put you off.

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By Jekyll and Hyde
16th May 2013 20:06

time to start shopping around?
If unhappy perhaps its time to look at their competitors rates and restrictions.

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By zeofiles
16th May 2013 21:02

Same problem but we found the answer
I have client who is in the process of moving their IF from HSBC to Allied Irish. They have suffered similar problems to @des.

Generally, the client has around £500k of invoices with HSBC at any given point, however their total funds in use and available funds normally reaches no more than £250k (50%) even though their agreement is a theoretical drawdown of 75%.

The reason is that over the last few years HSBC have really cracked down on credit limits, with credit rarely extended to small unincorporated customers. My client can either stick to the strict limit and stop supplying his customers or he keeps supplying his customers but is unable to draw down on the unapproved invoices. He chose the later, hence why his drawdown is such a low % of total factored invoices. Further more he is charged for all invoices sent to HSBC whether he can draw on them or not.

This probably holds true for several lenders, but AIB gave an impressive demonstration, were keen on pricing and offered increased credit limits on several major customers.

PM me if you need Allied Irish's contact details

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By Chris Smail
16th May 2013 23:50

Basle 3 I am afraid

Banks have to improve the quality of their portfolios to meet the capital adequacy ratios, which means limiting exposure to dodgier debt.

Politicians call on banks to lend more to smaller, riskier business whilst introducing controls to stop them doing so, hence we may conclude politicians are stupid or hypocritical.

Now how do I set up a poll...

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