Invoice Factoring / Equipment Finance

[Business Cam]

Hi,

Our 12 months installment plan is starting put a strain on our cash flow.

We are looking for equipment finance or invoice factoring companies, where we would get our money as soon as our customers signed the satificatory form.

Which one would you recommended?

Best regards,

Edward

[Guest]

don't...... as far as I understand factoring is just a loan on money owed, should the client miss payment they just claw it back from you....

[Guest Director of COP Security]

It might be worth investigating, factoring can be a little different from a loan on money owed.

Essentially you sell the debt to the factoring company and you can receive a percentage, usually up to 85% of the invoice value (including VAT). The debt then belongs to the factors. They will only pass it back to you if you have not honoured your side of the sale IE not delivered the goods or service that you invoiced. With some factoring agreements you can get credit insurance either as part of the package or as a separate deal, that will cover you for any non payment (less an amount, rather like you will have with your car insurance).

I don

[Rich]

What about leasing the systems?

http://www.chelseavale.co.uk/

[Guest]

In another incarnation i was using factoring, we got 90% of the invoice as soon as we e-mailed over the invoice details, payments t0 our account that day if needed.

7% was kept for the advance funds and on client payment in full we received the outstanding 3%. The factoring company chased up bad payers as well as notifying ourselves of the ongoing situation, However after 3 months of non payment they took back the 90%. Then it was down to us to chase and or set in court motions.

Factoring is handy for the short term, to get out of it and return to normal business is very difficult. This is what they rely on.

One person i know has found this solution to get out of factoring. Run two companies side by side. As your clients get more reliable take them from the factored side and deal with them on the normal 30 days account. A long process but then gives you the cash flow to make the transition from factored accounts to 30 day nett.

HSBC are one of the fairest factoring companies, but really you don't want to go down that route.

[Guest]

What about leasing the systems?

http://www.chelseavale.co.uk/

I agree with Rich, Leasing is the best option. Get a decision straight away and get paid for the job a few days after you finish it.

However, not all customers like leasing which is why I highly rate our factoring company. We use Regency Factors and they have been pretty good, PM me if you want a contact etc..

The good thing about Regency is you don't have to factor every invoice which is quite rare in the world of factoring. Therefore you could lease the ones you can and then factor the others.

Don't believe the rubbish you hear about factoring. You only get the money clawed back after the debt is unrecoverable, which is pretty bad if you let it get that far.

There is a downside in that you can get rubbish credit limits set for non limited companies. For example we applied for a credit account with COP and was "awarded"

[Guest]

In another incarnation i was using factoring, we got 90% of the invoice as soon as we e-mailed over the invoice details, payments t0 our account that day if needed.

7% was kept for the advance funds and on client payment in full we received the outstanding 3%. The factoring company chased up bad payers as well as notifying ourselves of the ongoing situation, However after 3 months of non payment they took back the 90%. Then it was down to us to chase and or set in court motions.

Factoring is handy for the short term, to get out of it and return to normal business is very difficult. This is what they rely on.

One person i know has found this solution to get out of factoring. Run two companies side by side. As your clients get more reliable take them from the factored side and deal with them on the normal 30 days account. A long process but then gives you the cash flow to make the transition from factored accounts to 30 day nett.

HSBC are one of the fairest factoring companies, but really you don't want to go down that route.

This is really not our experience of factoring, In fact we have renewed for several years now. We don't factor every invoice, so maybe that's the difference.

Dave

Ps: Come on Arfur bring it on (he hates factors!)

[Guest]

The good thing about Regency is you don't have to factor every invoice which is quite rare in the world of factoring. Therefore you could lease the ones you can and then factor the others.

Dave

Yep, thats the one that got us, we had to use every invoice with them.

As for credit limits ours were pretty good.

PS i would do it again, but with the knowledge i have now.

[Guest Director of COP Security]

There is a downside in that you can get rubbish credit limits set for non limited companies. For example we applied for a credit account with COP and was "awarded"

[Business Cam]

Hi All,

Many thanks for your valuable advise!! I am now clear of what option is available to me.

At the moment we are offering 12 month interest-free installments (like buying furisher from MFI) to our customers. So we are looking for something like loan and factoring combined; ideally,

i) once the customer signed the satifortory form, we would receive the money

ii) the 'factoring company' would collect the 12 installments over the 12 months period.

iii) Of course we expect the factoring company to charge a fair price for all these efforts. If the customer is non-payment, we are happy to resume the debt ourselves.

Well, this is just my wish list. I am wondering if there is any company out there which could offer something similar to this.

Many thanks,

Edward