Interested to hear from anybody that factors who they use and any recommendations
Work hard and give 5% of your profit away, no thanks
not a good sign…
Can you avoid it niteliner?
Avoid at all cost…road to ruin 
Agree with all of the above. If you have to factor invoices then there is usually something wrong with either your business model or your capitalisation.
There is nothing wrong with our module or capitalisation. Have a chance of very good work but pays 60 days so exploring various solutions.
It’s up to you of course, but I would be asking myself why they pay on 60 day terms when all of the invoices they send out will demand 30 day terms.
So they want you to lend them money for 30 days? Treat it just as you would for a late payment and add 8% + bank base rate to the invoice for each job. Formula below:
gov.uk/late-commercial-paym … rcial-debt
Edit, Advice here:
Don’t do it, it’s very difficult to get out of it once you start, they are only giving you a loan on the invoice value, if your customer doesn’t pay on time them wham, they take the money back out of your account overnight.
We did it, but managed to break free from it four years ago, will never entertain doing it again.
The way interest is calculated means that the 5% or whatever they quote for a rate is not 5% APR, but 5% for 30 days, so over the course of a year you will be paying a lot more than 5% of your invoice value compared to borrowing it at 5% from your bank and paying it back each month.
A factoring company will insist on taking over your complete sales ledger too, they won’t want to only deal with one of your customers.
As has been said, avoid like the plague and the same goes for any company offering payment terms longer than 30 days.
Harry Monk:
It’s up to you of course, but I would be asking myself why they pay on 60 day terms when all of the invoices they send out will demand 30 day terms.
Hi Harry thanks for the advice - I used this system years ago when I had a chauffeur Company and I know the pitfulls of it. Can I ask - and I hope you dont mind - I have read that ypu sub for Gregorys - are they any good and are they looking for subbies at the moment? I understand if you dont want to divulge any info. Thanks in advance
niteliner:
Harry Monk:
It’s up to you of course, but I would be asking myself why they pay on 60 day terms when all of the invoices they send out will demand 30 day terms.Hi Harry thanks for the advice - I used this system years ago when I had a chauffeur Company and I know the pitfulls of it. Can I ask - and I hope you dont mind - I have read that ypu sub for Gregorys - are they any good and are they looking for subbies at the moment? I understand if you dont want to divulge any info. Thanks in advance
I should have said if you want to send info off this chat my email is niteliner@live.co.uk
niteliner:
Hi Harry thanks for the advice - I used this system years ago when I had a chauffeur Company and I know the pitfulls of it. Can I ask - and I hope you dont mind - I have read that ypu sub for Gregorys - are they any good and are they looking for subbies at the moment? I understand if you dont want to divulge any info. Thanks in advance
It suits me, it’s subbing so there’s never going to be a fortune in it. Some of the subbies have been there years, sometimes subbies start and soon disappear so I suppose it suits some folk and not others. They always pay bang on time, terms are 30 days end of month. As to whether they need subbies at the moment, it largely depends on whereabouts in the country you are located, they tend to use subbies in parts of the country where they have outbound work, but not in sufficient amounts to make it worth opening a depot. Best thing is to give them a call.
17 years ago I started another base and needed to buy 4 trucks then and there. As I had a few vans and one 7.5,at the time, it represented a bit of a step up and the bank weren’t interested. I went to Bibby Factors, who were interested.
A lot I guess depends on your profitability and your customers. We pay 1%(OK most wouldn’t get that, and we negotiated down to 1% after 2 years). We rarely borrow, so our charges are very low. Because we have the facility, we don’t use finance or have an overdraft. We could stop using it tomorrow if we wanted. And there’s absolutely nothing wrong with our capitalisation. 
It’s been very, very good for us. I think it can be suitable for some businesses if you can control it and drive down the borrowing cost. I am blessed with our finance guy who is an ex bank manager, he understands percentage rates/APRs etc way better than the factor people, which can be rather amusing.
I sub for Xpo formely Norberts and there terms are and always have been 45 days, i lived on my overdraft for the first 6 months and thought about factoring but every o/d i spoke to talked me out of it
Bibby is a good and reputable company to deal with…Plus they offer Invoice Discounting.
These companies can be far more flexible than banks …and in truth are more widely used than
you may imagine in business today.
Option 2… Could well be your customer will pay you more quickly if approached even for
a small discount ? … I personally have achieved this for “Companies” in the past.
Good luck.
The thing with banks, factors, finance companies etc is that they are only there to make money, the more services you use, the more it costs you.
I know it’s sometimes a case of speculating to accumulate, but you really need a good accountant in order to run a successful business. They should guide you in the right direction, every business is different, so every business will have a different answer to this question.
Personally I would not factor, however I’ve never been in a position where I could afford to give up a chunk of my profit to get paid, if I got offered a fantastic rate with 90 days payment terms, then factoring would be something to consider. Which contradicts my earlier post, but having given it some thought, that was a knee jerk reaction.
So my advice is to ask your accountant and see what they think.
newmercman:
The thing with banks, factors, finance companies etc is that they are only there to make money, the more services you use, the more it costs you.Personally I would not factor, however I’ve never been in a position where I could afford to give up a chunk of my profit to get paid, .
I think my customers that I am only running a company to make money (oh alright, no one would employ me, so I have to work for myself 
), and certainly the more they use my services, the more they pay.
If you can get the right rate, it’s cheaper than any finance deal or overdraft. In truth, we usually have one low, short term finance deal going for the sake of credit history, the rest we write a cheque for, which may or may not depending mostly on the VAT cheque, put us into borrowing from the factor for a month or so.
I do agree that an accountants input is vital unless you are very financially literate, no disrespect meant to anyone. I used Bibbys based on my accountants recommendation.
The point about banks etc making money out of services they offer is a very valid point, how many people have been caught out by the small print? Even going overdrawn by a fiver can cost you ten times that. There are fees for this, that and the other. Everything you do costs money, individually the charges don’t come to much, but multiply them over the year and you will see that you throw a good few quid at the bank for services rendered.