Just like to know if people use factoring companies, are they a good way to release your cash or are they too cost effective ?
Posted in General Discussion.
factoring companies the quick way to alienate the companies that give gave you work!! they are more trouble than they are worth!!!!
The issue we had when we looked at this was that in essence the factoring company could credit score your customers and if they didn't approve under their criteria they would simply tell you not to work for them. I said but you as a factoring business are simply advancing monies due and if that customer didn't pay i would lose out because you would claim the money back. He said yes that's true but that's how we operate.
He also said that all transactions had to go through them that was invoicable including cash payments which they would advance when we presented the invoice but we had to pay the cash to their account.(Obviously so they can take a percentage)
It all seems too one sided to me.
if your going to give a % away to a factoring company why not tell your customers if you pay early within 7 days the yget % off the bill ;-)
we will not work with people or companies that factor due to the fact 95% of the time it means they havnt go a pot to pee in.
So best to avoid them by the sounds of things, plus they are going to benefit everytime (greedy gits)
I have to slightly disagree with SMH on " 95% of the time it means they havnt go a pot to pee in"
We are usually owed in the area of £40k at any one time so cashflow could be an issue if we didn't monitor it closely.
However we decided against factoring because i would rather deal with our customers directly and not via a 3rd party with only their percentage in mind.
We do have a few suppliers that use factoring but you have to look for the small print on their invoice to tell.
You know what a barge pole is?
I personally dont want to use it as the banks rip us off enough as it is, but with fuel bills and wages going out quicker than invoices getting paid I thought I would ask the question to see if it was a solution. I hear you Mr Speed leave well alone !!
If cashflow is your issue then an overdraft would seem the better option, if its to simplify your admin then it's not worth the price they charge. You'd be better off paying someone to do your books once a week
My advice to any small / subbie company or idividual . The rates are not there to cover the costs of factoring . Your business will not be managable it is really for companies that want cash but also have a good profit margin to absorb the extra costs
Sounds like wise words Barnsley Shipping
Factoring companies are way too aggressive, will only give you a bad rep.
All of you guys are aganist factoring. What you think about invoice discounting?
As i understand it, it's only available to companies with a turnover of over £250,000, although they state a fee of between 1.5 and 3% over base rate AND there is generally a minimum set up fee of 0.2 to 2% of the total turnover...That's £5000 on a £250,000 biz
I reckon if you need one, then it's too late already
Remember Cash is king factoring does enable companies to expand. But always do your own credit control. Factoring companies will tell you they can collect better,they can't!
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