It is an interesting perception that invoice finance providers are the lenders of last resort.
Historically I think there is some truth that businesses that were factoring had exhausted there other options. This was typically down to poor financial performance. This may still be the case but for very different reasons.
Overdrafts are no longer readily available to companies. Especially where the main asset on their balance sheet is the debtor book. If you wish to know more you may want to look at the Brumark Case but I won’t go into detail here other than to state that now in many cases invoice finance may be the only real option for many businesses.
Large companies that expect credit terms will almost certainly be used to seeing invoices that have factoring companies assignment notices on them. The perception of factoring has changed dramatically and it is now a very viable option for many successful growing businesses.
While it may be the only option for many businesses this relates to what the banks can offer rather than the poor state of the business looking for working capital to assist growth. On that basis, while factoring may well be the only option it is not considered to be the ‘lender of last resort’ any more.
When we speak to clients they are often upset that invoice finance companies charge additional fees that were not disclosed from the outset.
I am not sure I would go as far as to call them hidden fees but one thing I am certain about is that they could be more transparent.
While some companies simply have a service fee and discounting fee others have additional charges for virtually everything. On this basis it is important you understand the total costs and all the fees charged before making a comparison. Headline rates can be misleading.
By way of a simple example some companies include everything in their service fee while others will levy additional audit fees, annual renewal fees, etc..
Please remember to ask any lender for a full list of dispursements so you can make an informed decision.
Ultimate Finance have closed their regional offices based in Tunbridge Wells and Manchester. Clients who were located at these offices have now been moved to the head office in Bristol.
In terms of client management we understand that the transition has been a smooth one.
We hope that in terms of underwriting capability going forward that there is no impact.
Just as we thought Ultimate Finance were heading for a period of stability……..
Welcome to the Invoice Finance Blog.
Our aim is to provide topical and useful posts that business owners will find insightful in respect to the invoice finance market. Posts may relate to specific issues that business owners face, changes within the invoice finance market or new products that are available.
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