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Anyone using invoice factoring?

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Post Tue May 25, 2010 4:18 pm

Anyone using invoice factoring?

Is anyone using invoice factoring to get paid? We are thinking of it as it's taking longer and longer for customers to pay up - I'd welcome any comments or advice...
Martin
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Post Tue May 25, 2010 5:20 pm

Hi Martin,

Don't use them myself - but there is a discussion on the FSB website (you don't need to be a FSB member to view) where general consensus didn't seem too favourable.



Hope helps.

Martin
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Post Tue May 25, 2010 9:28 pm

DO NOT GO DOWN THAT ROAD!!!!

been their ate the pie!

it sounds good at the start but it will cost you in the end mate

best thing is chase down your money yourself

imho

G
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Post Tue May 25, 2010 9:41 pm

agree with the others why pay someone else to do what you can do your self :roll: you will certainly end up with less money.

Lynn
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Post Tue May 25, 2010 9:42 pm

If I was buying from a company that factored it's invoices, I would be looking for another supplier, simply because that company is adding another layer of profit, and once the invoice is passed to the factor, then hard to resolve any warranty issues.

do a calculation, does the amount you loose by non payment, over the year, come to more than paying to factoring all your invoices?
Peter
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Post Wed May 26, 2010 6:25 pm

Hi Martin,

I can speak from experience, been there done that.

I will say right from the start i would not be where i am today with out the factoring but, there is always a but..... it is not always the best or more importantly the cheapest option.

Peters ideas of factoring seem a little dated and out of touch with modern factoring practice. (not having a go peter but i have been down this road)

There are many different option to choose from, even invisible factoring that the end customer does not even see. The idea that when a invoice is factored you have no control over it is nonsense, if one of my customers queried a invoice with the factors the invoice was disallowed so it was in my interest to sort it out.

The truth is today, not many factors will carry the debt for longer than 90 or 120 days before it gets handed back to you, so if company goes bust you loss out.

The best way i can make you look at it is think of it as a open ended overdraft, limited only by your sales, if you have inhouse people who can chase your overdue accounts then is probably not worth it, get a overdraft/loan. if you dont have time to chase overdue account and leave it to the factors then some times it can work, cost of factoring over employees/your time, all i would say here is how hard are your factors going to chase, if you think about it, they earn there money loaning you money, so the more they loan you for longer the more they make, if that makes sense! is it in there interest to collect your money?

It can work.... but it can be a nightmare. for me it worked very well then i had a run of people go bust and it made a bad situation worse.
be very, very sure it is right for your business.

Paul
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Post Thu May 27, 2010 5:49 pm

invoice factoring

Thanks guys - guess you put me straight on that one....better get my DM's and a big stick then!

Martin
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Post Sat May 29, 2010 4:35 am

Been there done that too. NEVER AGAIN....

Even though I have a very acute cash flow problem at the moment, its not something that I'll consider again.

I'd suggested giving a % discount for immediate payment (up to 7 days) rather than pay huge fees to these companies.

Problem is, when you want to cease using them, the fine print is full of fees and charges called penalties. A lot need 90 days notice too. Once you have notified them, they start paying slow, and take out all there hidden charges at the 60 day mark. If you don't notify them, the charges are huge.

A lot of corporations here have policies that are not publicized to creditors, but if you offer a discount for early settlement, they must take up the offer. Even our government has the same policy.

Easiest way to find out if they have that policy, offer a discount for a quicker settlement of the account, and you may be surprised how quickly the money comes in.

Discounts range from 2% to 5% depending on the size of the debt.

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