Factoring Companies

I really detest Factoring companies and their working practices!

We ALWAYS pay our Invoices on time [sometimes well before they are due for payment]. Had a factoring company call yesterday about an Invoice one of our subbies sent us, last week! I know that they are only checking, that we have received it and are going to pay on time, but to be honest I can do without it!

This has happened alot over the years and it is no wonder some larger companies refuse to do business with any factored invoices!

I can see the temptation one might have to be suckered into their grasp, but surely if planning a business [proper business plan in the first place] one could avoid 'giving' the banks thousands for very little work!

I really can't see the point of factoring companies. As has been pointed out before (30 days payment) do you really want a muppet in a call centre ringing your customers chasing payment? Especially if they're not even due yet. One sure fire way of losing that customer.

If your cashfow means you're short of funds, get an overdraft

Speed Couriers Nationwide Ltd said:

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I really can't see the point of factoring companies. As has been pointed out before (30 days payment) do you really want a muppet in a call centre ringing your customers chasing payment? Especially if they're not even due yet. One sure fire way of losing that customer.

If your cashfow means you're short of funds, get an overdraft

Could not agree more!

And yes it is VERY annoying to have them keep calling

That's the problem with this business. People who start are preoccupied with how to get work and pay no attention to things like working capital and cash flow. God knows how they can afford to factor their invoices. Surely they must charge more for their services to compensate. Or do they?

Deja vu moment here.. I'm sure I just read this on the shed!

Paul I completely agree. So many people seem to see an ad for 1000 couriers needed, loads of works, etc etc, read some forum threads, buy an old van and start driving. Then when money doesn't start coming in immediately because they don't know what invoicing terms are, they're in trouble. No cash = no fuel = no business. Oops! Time for a business plan?

Id had my fingers burnt by a factoring company a few years ago. I STRONGLY ADVISE AGAINST USING ONE as they will not persue bad payers.. A few reminders to the customer but thats it then they take back what they've paid out for the bad invoice plus their charges and you find yourself in even more shit... STAY WELL AWAY FROM THEM!

Have to say I agree, sick to the back teeth of one company hounding me for the same things, I have now instructed my staff that I am never available when they call. I wouldn't mind an odd call here or there checking invoices, but when 3 different people call to check the same invoices, well thats just plain ridiculous.

Dont use factoring company send the local 'meatheads'round.

Desperate subbies will use factoring companies when all of their credit has been exhausted due to vendors not paying invoices on time. There was a thread on here the other day stating a 58 day late invoice!

Saddlebow Deliveries said:

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Desperate subbies will use factoring companies when all of their credit has been exhausted due to vendors not paying invoices on time. There was a thread on here the other day stating a 58 day late invoice!

You mean poor planning in the first place. Sadly it is not unusual for people to have to wait for payments

No its not bad planning at all... What are you saying that now we have to build in bad payers on an even bigger scale than we already do, and just because its always been this way doesn't mean it has to stay this way, i am sick and tired of extending credit to companies, I have done the job you so urgently wanted doing now pay the bloody bill on time. Yep I get wound up about this paying on time malarkey and your complacency makes me even more angry , usually find its the late payers or non payers that whinge most about factoring companies and no I don't use one I deal with it myself. Rant over.

From 1st November I am putting the payment due date on my invoices. That way the client has the opportunity to query it but if they don't it will stand up as the date it became overdue. It will be useful for the ones that can't count past 10.

Andy McTighe said:

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From 1st November I am putting the payment due date on my invoices. That way the client has the opportunity to query it but if they don't it will stand up as the date it became overdue. It will be useful for the ones that can't count past 10.

Always have put the due date on my invoices its built into the system that we use along with bank details for payment

Fastback Parcel Solutions said:

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No its not bad planning at all... What are you saying that now we have to build in bad payers on an even bigger scale than we already do, and just because its always been this way doesn't mean it has to stay this way, i am sick and tired of extending credit to companies, I have done the job you so urgently wanted doing now pay the bloody bill on time. Yep I get wound up about this paying on time malarkey and your complacency makes me even more angry , usually find its the late payers or non payers that whinge most about factoring companies and no I don't use one I deal with it myself. Rant over.

I hope you are not aiming that at my company?

We ALWAYS pay on time, and have paid almost instantly to help folk out that are struggling!

What I am trying to say is ... YES it is, and has always been a problem with companies hanging on to their money. I agree with you it is not right, but that is how it is, and because of this, planning should have been factored in to allow for this anomaly. The main reason new start ups go bust is because of bad planning.

I would say it is almost impossible to succeed on a shoe string! I can also assure you that the larger [in most cases] the company, their financial advisers dictate that invoices are only paid at the 'last minute'

It is no use moaning about it, the only way things will alter is with a change in legislation!

I am certainly not a 'late payer' but I would sooner not be involved in dealing with Invoices that are factored, the Banks and Factoring companies like 'Bibby' etc are nothing but a pain in the ass!

Good luck to anyone who gets involved, as they will find it almost impossible to get out of the thieving barstewards clutches!

I can vouch for RLT on what he says regarding timely payments.

I was speaking to one of my regular clients regarding I regular run that I used to do very urgently and just asked what happened to the run? as it just stopped, well the run was too Bibby at Banbury, and the reason it stopped was my client used this factoring company and it was really extortionate in fees, so they pulled the plug, so now they have insurance in place to the value of 1m just in case to cover any loss of payment or other loss...

Factoring is for those who don't have good credit control. Im not a fan of factoring, never received nor given, but having credit control in place as a backup is more effiecent and less harmful, by using credit control is by far a sure winner and one where you dont need to use factoring, and costs less with no harm done..

I personally in the short time Ive been trading have had only 4 instances of either late payment or a chargeback, where the transaction wasn't recognised by the card holder (ie communication between cardholder and the person who placed the order and accounts), not only have I received the payment in full on each for all 4, but have also had late payment fee's and associated costs as well, all this before using my friend as a last resort..

If we have consistant late payer are given the boot, trust me Ive given multi million pound campanies the boot for the messing about that I don't need with fair warning.

No RLT it wasnt aimed at your company as i have no knowledge of how you pay as i have never subbed for you, and i agree with you that you cant come into this business on a shoestring because you will not survive the first 12 months let alone the first 3 months. But i was saying is that just because it has always been like this doent mean it has to stay like it is, mark my words legislation is in the pipeline and very much overdue. Also agreed with is the larger the company the harder it is to get payment on time and that is where i was commimg from, one large haulier close to me is 60days eom but took consierably longer than that to settle their bill and that was after numerous calls and emails and despite the fact they agreed to my terms of 30 days eom. Needless to say if they call again i shall politely decline their offer of work (especially as it was at 4pm on a Friday last time). I should also add that i dont and never will use a factoring company i dont want people harassing my clients i can do that by myself. PS...i never make thing personal in a forum but for some if the cap fits then by all means wear it.( again not aimed at you)

RAPID LIGHT TRANSPORT LTD. said:

I would say it is almost impossible to succeed on a shoe string!

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Fastback Parcel Solutions said:

and i agree with you that you cant come into this business on a shoestring because you will not survive the first 12 months let alone the first 3 months.

I have to disagree with you guys and depending on what you class as a shoestring..

Using a factoring company will lose you business AND money

Bibby chase up accounts that aren't even due, and do nothing but chuck the debt back at you for those they haven't even bothered to chase up in the 1st place.

As i've said before, and i'll say it again. Would you want a stranger talking to your customer?

I understand cashflow can be an issue, but as with any business you can't come into it without any funding.

You shouldn't start up if you haven't got at least 3 months of living expenses as back up

Factoring does have a place in modern day business, but factoring companies do not do themselves any favors by telephoning all the time I agree.

Fastback Parcel Solutions said:

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No RLT it wasnt aimed at your company as i have no knowledge of how you pay as i have never subbed for you,

Then let me say it - I've subbed only once for him and he paid me so fast I'm not sure I got home before it landed in my bank! And a better than fair rate too. I was so ppppp-ed off when he rang me a day later to do the same job again and I was already far away on the road so couldn't do it.

LETS FACE IT GIVING TERMS TO ANY ONE IS IN FACT A CASE OF YOU SUBSIDISING THEM, IN OTHER WORDS YOU ARE LOANING THEM MONEY TO KEEP THEM A FLOT INTREST FREE I MITE ADD. THERE IS A RULE FROM GAMBLING THAT HAS ALWAS STUCK WITH ME " DO NOT BET WHAT YOU CAN NOT AFORD TO LOSS", SO I CAN UNDERSTAND WHY SO MANY PEOPLE USE FACTORING FIRMS, AND AS FOR THEM PHONING THEY HAVE A DUTY TO CHECK THAT THE INVOICE IS FOR THE WORK DONE AND I AGREE IT WOULD BE NICE IF NO ONE HAD TO USE THEM BUT IT IS A NESSESARY EVLE MOST POEPLE THESE DAYS, CREDIT/OVERDRAFTS ARE NOT LIKE WATER TO GET.

GOING FURTHER ON THIS LETS SEE HOW MANY OF YOU THAT SAY YOU HAVE A FULL BUSINESS PLAN AND THE FUNDS TO BACK IT, WOULD PAY ON RECIVING THE INVOICE BY BANK TRANSFER? SO COME ON PUT YOUR MONEY AND BUSINESS WHERE YOUR GOB IS.

PLEASE - unlatch the caps lock key! It's almost impossible to read all that.

Denis is this better for you?

Thank you, thank you, thank you! ⧺kissy smiley⧺

A bank is a place that will lend you money if you can prove that you don't need it.

Saddlebow Deliveries said:

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A bank is a place that will lend you money if you can prove that you don't need it.

In what life time? Banks have not lent money to businesses unless there have something to put up against the loan and overdrafts can be just as bad, they can be called in at any time. Factoring yes can be a pain in the ass when they keep phoning customers to check an invoice but if you look at it they are also protecting you the customer from fraud and as for there cost well if you shop around you can get good rates for there services from a fixed fee to 2% per month, yes there are the charge backs but as with ever thing you have a risk involved especially when you are dealing in job now payment later.

Like everything Factoring has pro's and con's.

From what i can tell the factors will sometimes call a customer to check the validity of an invoice and then again if payments are later than the agreed terms.

Isn't this what would happen anyway in the case of late payment.

With factoring you are only having access to monies already earned and you just pay for the service.

With an overdraft you are receiving money that has not been earned therefore you are working for the bank.

Nottingham & Derby Couriers said:

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Like everything Factoring has pro's and con's.

From what i can tell the factors will sometimes call a customer to check the validity of an invoice and then again if payments are later than the agreed terms.

Isn't this what would happen anyway in the case of late payment.

With factoring you are only having access to monies already earned and you just pay for the service.

With an overdraft you are receiving money that has not been earned therefore you are working for the bank.

Agreed, also an overdraft doesn't offer insurance on the debt

Express Couriers Northwest Ltd said:

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Nottingham & Derby Couriers said:

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Like everything Factoring has pro's and con's.

From what i can tell the factors will sometimes call a customer to check the validity of an invoice and then again if payments are later than the agreed terms.

Isn't this what would happen anyway in the case of late payment.

With factoring you are only having access to monies already earned and you just pay for the service.

With an overdraft you are receiving money that has not been earned therefore you are working for the bank.

Agreed, also an overdraft doesn't offer insurance on the debt

This is correct, but you can get bad debt insurance independently if you look, and factoring can be as cheap as a credit card you have a set credit limit and you put invoices on and then draw on them anything from 75%-90% of the invoice value so you have always got working capitol and the only thing you have to put up in most cases is a personal guarantee, where with the bank you would have to put you house on the line.

Saddlebow Deliveries said:

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A bank is a place that will lend you money if you can prove that you don't need it.

Lol... Well said

As said before MANY companies will not do business with those that factor. [and I don't blame them] They do NOT chase your debts, but they do harass those that have been invoiced. They also charge alot of money for the privilege of getting 'some' of your money right away.
Once in their grasp it is very very difficult to get out of.

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RAPID LIGHT TRANSPORT LTD. said:

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As said before MANY companies will not do business with those that factor. [and I don't blame them] They do NOT chase your debts, but they do harass those that have been invoiced. They also charge alot of money for the privilege of getting 'some' of your money right away.
Once in their grasp it is very very difficult to get out of.

strong text

And again I will ask for those will not deal with factoring firm will you pay on invoice or will you expect the subie to fund your firms for 30/60 or 90 days?

In a perfect world - all of us decline to accept any work from companies wanting more then a week to settle for a job and before you know it money problems are solved - WHY CANT WE HAVE PAY AS U GO FOR COURIERS, even cabbies carry on board card payment machines these days - paypal now offers a card machine for under £50 with no extra charges just a small fee per transaction - i personally wouldn't mind paying a small fee if it meant i had the money in my account when i parked up my vehicle end of day.

Slh boston ltd said:

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RAPID LIGHT TRANSPORT LTD. said:

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As said before MANY companies will not do business with those that factor. [and I don't blame them] They do NOT chase your debts, but they do harass those that have been invoiced. They also charge alot of money for the privilege of getting 'some' of your money right away.
Once in their grasp it is very very difficult to get out of.

strong text

And again I will ask for those will not deal with factoring firm will you pay on invoice or will you expect the subie to fund your firms for 30/60 or 90 days?

Can obviously ONLY speak for our company. We pay ALL invoices on time. Often before, often immediately to help out if asked!

PARCEL i said:

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In a perfect world - all of us decline to accept any work from companies wanting more then a week to settle for a job and before you know it money problems are solved - WHY CANT WE HAVE PAY AS U GO FOR COURIERS, even cabbies carry on board card payment machines these days - paypal now offers a card machine for under £50 with no extra charges just a small fee per transaction - i personally wouldn't mind paying a small fee if it meant i had the money in my account when i parked up my vehicle end of day.

I know what you mean, but sadly this is NOT an ideal world. Until action is taken by government legislation things will not alter, it is what it is, and has been this way ALL of my working life. Therefore it is important for anyone thinking of starting out to make sure that they have enough capital to allow for the way things are! How I see things is that people often come into this with little or no thought and having to rely on what in reality is not there! This is where the factoring companies seize their pray. Most financial advisors would only tell larger organisations to hang on to their monies as long as possible, it is more beneficial having capital in the bank and hence why we have longer agreements on payment terms, sometimes up to 120 days or more.

RAPID LIGHT TRANSPORT LTD. said:

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PARCEL i said:

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In a perfect world - all of us decline to accept any work from companies wanting more then a week to settle for a job and before you know it money problems are solved - WHY CANT WE HAVE PAY AS U GO FOR COURIERS, even cabbies carry on board card payment machines these days - paypal now offers a card machine for under £50 with no extra charges just a small fee per transaction - i personally wouldn't mind paying a small fee if it meant i had the money in my account when i parked up my vehicle end of day.

I know what you mean, but sadly this is NOT an ideal world. Until action is taken by government legislation things will not alter, it is what it is, and has been this way ALL of my working life. Therefore it is important for anyone thinking of starting out to make sure that they have enough capital to allow for the way things are! How I see things is that people often come into this with little or no thought and having to rely on what in reality is not there! This is where the factoring companies seize their pray. Most financial advisors would only tell larger organisations to hang on to their monies as long as possible, it is more beneficial having capital in the bank and hence why we have longer agreements on payment terms, sometimes up to 120 days or more.

There is also pingit for payments, but again when it cones to waiting for payment and budgeting for it that is almost impossible to do unless you know in advance whet volume of work you are going to do for the time you have to wait, and factoring company's do not sit cold calling or sending flyers out to firms, firms go looking for them and they all work differently and is up to the firm to read what is offered and the term of the contract as some are for a fixed 3 year time and some are 30 days rolling contract, and the myth that terms have always been is wrong, terms of payment come about in the 1980's before that only government body's could get terms and most firms will still only offer terms to these body's.

Slh boston ltd said:

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And again I will ask for those will not deal with factoring firm will you pay on invoice

Yes. Payments are made within a few days of receiving hard copy invoices & pods. Even sameday payment in some cases.

Slh boston ltd said:

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RAPID LIGHT TRANSPORT LTD. said:

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As said before MANY companies will not do business with those that factor. [and I don't blame them] They do NOT chase your debts, but they do harass those that have been invoiced. They also charge alot of money for the privilege of getting 'some' of your money right away.
Once in their grasp it is very very difficult to get out of.

strong text

And again I will ask for those will not deal with factoring firm will you pay on invoice or will you expect the subie to fund your firms for 30/60 or 90 days?

We don't expect credit, other than the couple of days to get the hard copy POD and invoice to us - payment on receipt of invoice here.

HSP Couriers LTD said:

Yes. Payments are made within a few days of receiving hard copy invoices & pods. Even sameday payment in some cases.

Always been paid within days of doing a job for H

I've had to send out 7 warning letters today for late payment. God help them if i don't get my money by friday, looks like i will be issuing a few late payments out if i don't

M & P Express said:

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HSP Couriers LTD said:

Yes. Payments are made within a few days of receiving hard copy invoices & pods. Even sameday payment in some cases.

Always been paid within days of doing a job for H

Thanks Gavin.

The same can be said for Lloyd @ Dash Despatch too.