funding restrictions

The lower the advance payment rate the lower the risk for the factoring company but in view of the increasingly competitive nature of the factoring market, the headline payment rates have been increased from the traditional maximum level of 80% to 85% and even 90% which are levels that the factors aren’t really comfortable with.

Many of the factoring client managers are under instructions to try and keep the factoring payment rates as low as possible which is done in a variety of ways. Firstly the factors will sometimes set ridiculously low credit limits and refuse to fund anything above that limit and we have seen limits of £2,000 on Royal Mail set by one clearing bank factor capped only by the £10,000 limit that one factoring company set on it’s own parent.

(factoring case history)

(another factoring case history)

Factoring companies will unapprove any debts that are disputed and whilst we cannot blame them for that some of the disapproved debts defy belief including cases where the customer has asked for a copy of an invoice resulting in the whole account being disapproved.

 Verification of outstanding debts is another favourite with the whole account being unapproved if the customer doesn't reply to the letter.