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• 05 Feb

  Help Finding A Replacement Factoring Company

  

  Rumours are circulating once again that one of the UK's factoring companies is seeking to off load their book of factoring clients.

  If this affects your company don't panic, there are replacement factoring options available from providers that will welcome you with open arms.

  SEEK REPLACEMENT FACTORING

  We have seen similar situations before, when funders have asked clients to find alternative facilities, customers have in the past received letters from their funders - out of the blue - asking them to find replacement finance.

  In some situations like this a particular alternative provider may be suggested. This company may well suit your needs, but you should not miss the opportunity to search the market and see what other alternatives are available. There are over a hundred providers in the UK, including factoring companies that are bank owned and others that are independent.

  Terminating Factoring Clients

  In this case it is the factoring clients that are affected, presumably that is because factoring requires the provision of a credit control service, in addition to prepayments, which needs to be delivered by specialist staff. Invoice discounting is simpler to provide, in that it only offers prepayments and the clients undertake their own invoice collection.

  Some of these factoring users may want to take this opportunity to consider if they even need a factoring service. The option to move to invoice discounting may be attractive to some that would prefer to handle their own credit control (see our free Guide To Credit Control).

  Help Finding A Replacement Factoring Company

  Either way, the good news is that there are plenty of alternatives. Whilst getting that notification is likely to be an initial shock, you could end up saving some money from the process of finding a replacement factoring company. We have found huge swings in the cost of factoring between different providers (165% between the cheapest and most expensive in one study), so there is likely to be an opportuntiy for us to help you to save money.

  There should be a period of notice specified in your factoring agreement for situations like this.It is likely that any communication from your factor will set out the time period that you have to find an alternative facility. Don't worry, we have been able to set up some arrangements within 24 hours, where required.

  Leaving Factoring

  If you are in a good cash flow position, you might want to consider leaving factoring altogether. If so, see our factoring termination guide for ideas on how to wind down a facility or move to an alternative financing arrangement.

  By Glenn Blackman