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• 10 Jun

  Are Working Capital Partners Factoring Clients Finding What They Need

  Following the Administration of Working Capital Partners (WCP), I am starting to wonder if some of the clients are struggling to find the type of replacement facilities that they need.

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  Are Factoring Companies Struggling To Help WCP Clients?

  We have just been in contact with yet another previous WCP client, needing help finding a factoring facility to substitute for what they had from WCP. This is in the light of having spoken to another small client of WCP, that told us that they had received a call from an alternative factor (or factoring broker) every day since the Administration last month. I am starting to wonder if some of the parties trying to contact these clients are having much success funding alternative factoring companies for the clients.

  Analysing The WCP Client Sectors

  So I thought I would have a look at the client book (using the proxy of a debenture having been registered by WCP at Companies House). The methodology could include some previous clients that have since moved elsewhere, but whilst it is not necessarily completely accurate, it was only intended just to give some insight into the type of clients that WCP were supporting.

  Breakdown Of Trades

  When you strike out the 40%+ that are either dissolved companies, insolvent or non-trading (quite a high percentage), the remainder are reportedly in sectors (according to their SIC codes) that could be broken down as follows:

  • 30% - services (*see the breakdown below).
  • 20% - construction sector, building and related trades.
  • 11% - manufacturing.
  • 11% - wholesalers.
  • 8% - IT and software.
  • 6% - retailers.
  • 3% - transport.
  • 3% - consultancy services.
  • 2% - real estate related.
  • 7% - other (this includes maintenance, agriculture, agents, publishers, machinery installers, mining and regulatory services).

  *The services sector businesses include: accounting; advertising; environmental consultancy; cleaning; HR services; employment services; education; food services; residential care; social work; design, tour operators, waste disposal and telecoms.

  Analysis Of Industry Sectors

  The list above is quite a mixed bag of sectors, with concentrations in construction - which very few factors support. There are a lot of other sectors that many factors would probably struggle to support e.g. retail, agents etc. Conversely, the concentration of employment agencies at c. 2.4% (a generally simple business that many factors prefer) appears below the typical proportion of recruiters that we see across the factoring industry generally. So it appears to be a book including some of the more difficult trades, which was our interpretation of their niche - helping companies that others often couldn't find support elsewhere.

  Having not heard any further rumours about any proposed purchase of the book, I wonder if the nature of the client trades is an issue for some potential acquirers. Or if the selective, non-committed nature of the arrangements is something that could be deterring potential acquirers? Time will no doubt tell.

  By Glenn Blackman