Access to Funding in the Factoring Market
Whilst the ongoing credit crunch saga and the recent events with Lehman’s bank are affecting the availability of finance generally, the factoring and invoice discounting markets are still relatively unscathed.
Some of the factors and discounters have tightened up their funding criteria but there are still players within the market that are leading by being bold with the finance they will offer. For the present time at least, the availability of finance within the factoring market has not been significantly affected.
This may be due, at least in part, to the fact that the underlying security for a factoring transaction is the value of the clients outstanding sales invoices, which will hold their value, as opposed to assets that are dropping in value e.g. property. Similary, unsecured credit such as loans are becoming harder to access.
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September 19th, 2008 at 8:34 pm
Interesting comments Lord Blackman but do you not fear that with so few Factors taking the bold approach that many may follow the path, which in my humble opinion is incredibly short sighted of pursuing non commission based introductions such as the fabled non commission earning accountants?
On the flip side do you feel that the Broker will be the linchpin of the industry in these tight times?
October 29th, 2008 at 3:32 pm
Firstly, I am not convinced that as many accountants as we might imagine are “non commissioned”. Our research suggests that only 61% of accountants interviewed at random did not get a commission for factoring prospects introduced historically and only 20% would not want a commission in the future if they were to introduce prospects to use our free, independent invoice finance quotation search service
The other interesting finding from our research was that very few accountants are in a position to give more than a few referrals to the factoring companies each year (and then they tend to use the same 2 or 3 factoring companies each time which does not give the client much choice.
I think the truly independent brokers will remain important within the factoring industry. From the factoring companies perspective the broker can deliver a large volume of introductions and from the client’s perspective an independent broker will have access to a broad range of providers, not just 2 or 3. In addition, brokers such as ourselves will have extensive industry experience so they can advise the client as to exactly how a particular factor operates, this is unlikely to be the case with an accountant.