What happens if my Factoring provider suddenly pulls out of the market?
This has cropped up a couple of times recently following the decision of a well-known big bank to close its Factoring Book. I won’t name it, but it will be no good “closing the stable door after the horse has bolted” – there is a clue in there somewhere.
Anyway, it is true the bank has decided to stop providing factoring facilities, so what can their clients do.
Well, I guess the first thing is don’t panic.
Whilst there are plenty of providers waiting in the wings ready and able to take on your business, it may also be a good time to take a step back and re-evaluate how your business is funded.
If factoring is still right for your business, then as stated there are many providers out there who will be happy to take you on – the key is finding the right fit, a provider that understands your business and can tailor a facility to support you.
Or, is your business now at a stage where you can consider moving to an Invoice Discounting facility? The positives for such a move are that it can be cheaper and, in many ways, a simpler facility to run. The negative, to some, is that you must take on the credit control. If you already have systems to do so this is ok but if not, you will need to put them in place.
It is also worth considering if Invoice Finance, that is discounting or factoring, is still right for your business. It may be that the business has reached a stage where there are better alternatives to structure the funding and this would be a perfect time to consider all options.
Of course, any decision has to be the business owners but it is a minefield out there and Honest John is always here to help just give me a call or send me a mail.
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