factoring solutions case history

Many of our factoring enquiries are from companies that aren’t happy with their existing factoring arrangements mainly due to either poor service or else the amount of funding being considerably less than expected.

One such company had sales of £7.5m per annum with 65% being exported and their cash flow was suffering due to the restrictive credit limits being applied by their factoring company.

We could understand if the company was selling to high risk companies or startups where no information was available but these customers were the bluest of blue chips.

Two companies in particular only seemed to warrant credit limits of £10,000 according to the factoring company. Laughably one was a well know high street bank whilst the second was the factor’s own parent company.

As the factoring company wouldn’t fund any customer balances in excess of their credit limit this had the effect of reducing the nominal advance rate of 80% to an actual rate of 60% and the effect on the company’s cash flow was so serious that they ended up turning away new business as they couldn’t finance any higher levels of sales.

Luckily we were able to introduce them to a factoring company that didn’t operate these restrictive practices before the repercussions became too serious.

Factoring Solutions