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• 23 Jun

  Is Cheap Factoring Always Best Factoring?

  It is interesting to note that we have had a number of enquries recently from businesses who already use factoring and are looking to change providers but NOT in order to save on cost. What we have noticed about some of these recent factoring enquiries is that they are driven by a need for an improvement in service levels rather than costs, specifically around the collection of debts.

  Going back a couple of years, when these businesses started using factoring, there were some very cheap factoring deals on the market and those rates were able to be offered as the factoring company provided very little in the way of a collection service.

  It seems that with the advent of the credit crunch and the recession the job of credit control, chasing in the unpaid sales invoices for a company, has got tougher. It is no longer enough for a factoring company to charge a cut throat rate sound in the knowledge that the debtor payments will trickle in on their own without any effort (hence without incurring any cost).

  What we have seen is businesses seeking out an improved credit control service as the cut priced factoirng facility they already had is not providing the level of service needed to get their invoices paid in reasonable time which is having a dramatic impact on their cash flow.

  By Glenn Blackman