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• 19 Jun

  Factoring Clients Change Invoice Finance Companies More Often

  The majority of invoice financing users are happy with their current provider, we found that 98% were prepared to recommend their existing provider, which speaks volumes to the general level of satisfaction amongst companies already using these working capital enhancing products.

  Change Invoice Finance Companies

  However, there are always a few clients that want to change invoice finance companies, often they are looking to improve either:

  • Their rates - by shopping around the market you may be able to find a cheaper quote, for the same (or a different) service and to access the various offers and discounts that are offered to new clients.
    
    
  • Service levels - the service can vary dramatically between providers. Things like staff to client ratios will affect this, as will the method of operation. Sometimes a client simply does not get on with their contact at the funder so wants to seek a change of personnel.
    
    
  • Funding levels - clients often move to a provider that can release more money as the new funder is prepared to take a more relaxed view on some aspect of risk, for example funding RPOs, particular customers or prime debtors.
    
    
  • Security - sometimes a client will be seeking to provide less security e.g. removing, or limiting a personal guarantee.
    
    
  • Product - in some cases the client will want to change products e.g. improving the electronic interface with the financier. or moving from a factored product to a discounting service.

  Research Into Average Client Life

  We undertook some research into the number of different providers that existing users of invoice finance had used. We have previously reported that the average number of companies used was 2.14 across the life of the client - an average of 5.28 years using these services. This again suggests that these products tend to be a medium rather than short term funding solution.

  This average client life is also interesting when you consider the total number of selective invoice financiers that have entered the market over recent years, with one of the largest recently diversifying into a whole turnover offering.

  The Choice Of Companies In The UK

  There are over 80 invoice finance companies in the UK to choose from, so this average number used of just over 2 is fairly modest compared with the number of options that are available.

  How Product Affects Propensity To Change Service Providers

  The average number of providers used was affected by the type of service that the clients were using. We found that factoring clients had used just over 16% more factors than their invoice discounting counterparts. This suggests that factoring clients have a higher propensity to move service providers than users of invoice discounting.

  The Reason To Move

  One obvious reason for this increased propensity to move could be the element of service involved with providing factoring. When a client uses discounting, they receive funding but not credit control support, with factoring the credit control function is outsourced in addition to the provision of funding. This service is delivered by the factor and the nature of that service can vary substantially between providers. It is possibly this that causes factored clients to change factors slightly more often than users of ID.

  Help Changing Providers

  If you are thinking of changing invoice finance companies we would be happy to explain the differences, and layout the full range of choices in front of you. Please call Sean on 03330 113622 for a discussion in confidence and for free independent support and advice. There is lots of support available to help you change invoice finance companies.

  By Glenn Blackman