The number 1 mistake made in Factoring don’t do this

You tell us what you want and we will deliver it quickly and easily for you, with 92 Companies (at the last count) lending money on your book debt, knowledge in this market, can make your business much more successful

• Debtor Concentration Limits, we can arrange for no debtor concentration limits?
• Some of your clients need special treatment; well it is vitally important you have access to a decision maker, so you can accommodate, your clients needs.
• You don’t like the idea of passing over the entire debtor book. We can arrange for you to pass across what you wish to.
• The advance on invoices is not enough. Well with additional security, in any form, we can lend substantially over the value of the invoices

Or why not just have an overdraft facility secured on your book debts with a limited personal guarantee, say at 20-30% of the facility and you just collect your debts as normal (a limited personal guarantee, it makes for a happy marriage, keeping the home safe).


The number 1 mistake made in Factoring, don’t do this!

My name is Mark Smillie, I have been dealing with Finance and Factoring Companies for the last 30 years and boy has the Industry changed.

With so many Companies offering some type of Finance on your Invoices, it really is important that you choose the right one.

The Number 1 mistake made in Factoring:

Virtually every person has been involved in taking some type of Finance be it personal, business or even a Mortgage on your home.

The first car or subsequent car you purchased, almost certainly had some type of finance on it.

Well the point I am trying to make is that from a very young age you have been conditioned to ask the following questions.

How much is it going to cost me and what are the repayments?

Outstandingly good questions for virtually all types of finance, except for one type of Finance and that is raising money from your invoices, I will explain later.

Communication is largely finished when you raise business finance, providing you make the payments it is hassle and stress free, for you.

Hence it is entirely normal, when it comes to Factoring; the Director asks the following questions.

How much does it cost and what percentage can I have upfront?

Thinking all Factoring Companies are largely the same, I will go where the best rate is.

They are then influenced by the quality of the salesperson and the name of the Finance company or Bank offering the deal, again thinking all Factoring Companies are the same.

Well I promise you, they are not.

Here is the key difference between Factoring and a normal finance deal

“With this type of finance, you speak to the Finance Company at least once a week and usually you will have a daily interaction with them online”

If you have a completely bog standard business, where your clients pay reasonably on time and you will never have any special requests to make (in my experience most companies will have many special requests to make).

Then it might be okay to look for the cheapest, but do look out for their hidden charges, if you have a really standard business, I can introduce you to what I believe is the best high street Bank, offering a great deal and service.

I was rung by a Company Director from Liverpool who went to 4 different companies for quotes before contacting me.

He will probably go with the best salesman and quote.

Out of the companies he found himself, 3 are okay, but only ok, one is not.

I recommended a company that we know well and our clients have nothing but good things to say about them.

Their company turnover and projected level of borrowings and type of business, is a perfect fit for the Finance company, which means a hassle free time when dealing with them.

They are known in the industry, for attracting the best staff and keeping them. Would you want your account manager constantly changing and never understanding your needs?

He will meet a Company Director, who incidentally has an incredible “can do attitude” and he will be able to go back to her at anytime, this is worth its weight in gold due to the business having extra financial flexibility, when there is a need for it.

Compare this with

I was speaking to another client about raising some money on a property and he happened to mention he factored with one of the Banks.

He said he was ideally looking for a new Factoring company but no one could match their rate.

But then went on to say, they would not take two of his major clients and he has to fund these clients themselves.

Would it be cynical of me to say, that by not collecting in the debt as quick as they could, they are earning more in interest, to help subsidise their low “headline rate”, besides he could always collect in the debts themselves.

I asked him what else he was unhappy with them about, he said

“Well Mark have you an hour on the phone now and I will go through everything”.

He is preparing a 1 page email with bullet points of what he would ideally like for his Company. Incidentally they have been giving him a bad service and constant headaches for 11 years, but they are cheap.

I wonder how much more profit his company would have made with a really good finance partner, who knew and understood his business.

Clients tell me constantly

“Their Invoice funding company, just do not understand their business

”The reason for this is simple they chose the wrong Factoring Company, it’s not their fault, they thought they are all the same. A really good Finance Company will make a big difference to your annual profit, because it will give you more financial freedom and not be a cause of stress

If you would like to explore your options and deal with a Finance Company that is going to make your business life easy and far more profitable, then why not pick up the phone for a chat.

Look forward to speaking to you shortly.

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