- 15 Apr
Do You Have A Complaint About Your Invoice Finance, Factoring Or Invoice Discounting Company?
If you have a complaint about your invoice finance, factoring or invoice discounting facility we would like to hear from you as we can help you find alternative sources of funding. The majority of invoice finance customers are satisfied with their facilities - we know this as we survey invoice finance clients of numerous different invoice finance companies to check that they are satisifed. However, when we come across a dissatisfied invoice finance client with a complaint against an invoice finance company we try to help them solve their problems by finding them alternatives.
These are some complaints that we sometimes hear from prospective clients together with details of what we can do to help:
My invoice finance, factoring or invoice discounting facility costs too much, is too expensive or is overpriced
The price of an invoice finance facility is normally composed of three components, the service charge/administration charge (normally a percentage of turnover or a fixed cost), discount charge (normally a percentage over bank base rate or LIBOR charged in respect of the amount of funding you draw down) and other charges (these can be in respect of electronic transfers, banking charges or various other fees). Prices and the approach to pricing that different invoice finance companies charge can vary enormously.
We will happily check your current invoice finance costs against alternative providers and you can either consider moving to an alternative invoice finance company or you can try an renegotiate with your current provider (this may be easier if you have alternative quotes). Some products are charged in a completely different way either by way of a single fee or by a tariff of charges which can even be tailored in some cases, once again we can advise you about the alternatives.
The funding through my invoice finance facility is overly restrictive or I don't receive enough funding
Funding is normally driven by a formula - this may be a percentage of outstanding invoices but there may also be other restriction such as funding limits, credit limits, prime debtor restrictions or reserves that affect the amount of funding that you get.
Once again funding varies dramatically between invoice finance companies and different products. We can help you find alternatives.
My relationship with my invoice finance company, factoring company or invoice discounting company is bad or has broken down
Again the relationship that a client has with the staff of an invoice finance company with vary dramatically between different providers. In some cases one person will deal with all aspects of a clients facility and in other cases there will be large numbers of staff handling your account or even a call centre style operation. Whatever the issue, there are likely to be alternatives and there are invoice finance companies that pride themselves on building strong personal relationships with their clients.
I want to leave factoring altogether
Occasionally we will hear this from a prospective client so we put together an article which explains: 10 Steps To Leave / Get Out Of Factoring. Remember there are alternative products to factoring - you can still access the funding without the credit control service in many cases.
The credit control service or invoie collection service from my factoring company is not good enough
Where you have a factoring facility the factoring company will normally undertake the credit control or invoice collection function for you. Many clients are very happy with this service and it helps them save costs by not employing credit control staff or not having to do the credit control themselves.
Again what is included in the credit control service will vary dramatically between different factoring companies. Some offer a fully comprehensive service that will enable you to rely on their staff for all aspects of your sales ledger collection. However, some factors only concentrate on the larger debtors and you will have to undertake some of the work yourself. This may be reflected in a cheaper prices but in some cases that may not be sufficient.
If the service you are receiving from your factoring company is not up to scratch speak to us and we will be able to find you alternatives where you can speak to existing client's to check the quality of collections service that they provide.
The bad debt protection credit limits on my invoice finance facility are restrictive or too low
Where you have bad debt protection (sometimes called non recourse) added onto your invoice finance facility the financier will write credit limits on your debtors. The amount of the credit limit is normally the amount or value of invoicing that will be protected should the customer go bust (the financier will normally pay you after a given period of time following the failure of a customer).
The level of credit limits written on debtors differs between providers. It will depend upon how they write their limits (some re-insure through a credit insurance company, some take the risk themselves and some will allow you to operate your own credit insurance policy), and in some cases the level of exposure that they already have to a particular customer across all of their clients. Hence you can find different providers that will write different credit limits by shopping around.
My funding limits or prime debtor restrictions are restricting my availability
As covered above, the funding formula will differ between invoice finance companies. Just because you have a particular prime debtor restriction with your existing provider does not mean that the prime debtor restriction will be similar if you speak to other companies. This also applies to funding limits that are sometimes used to restrict funding against certain debtors.
Customer cash or debtor payments are not being allocated to unpaid invoices correctly or cash is being held in an unallocated cash suspense account
When cash or debtor payments are received by your invoice finance company in some cases e.g. factoring, they will be operating the sales ledger for you and they will allocate those payments to the unpaid invoices on your sales ledger. This has the effect of repaying any funds you have drawn against that invoice and releasing the balance of the invoice (less charges) into your availability. Hence, if an invoice finance company is unable to allocate cash quickly your funding can be impacted.
The factors ability and approach to allocation of cash will vary between providers - if cash allocation is a problem we may be able to find you an alternative provider that can solve that problem for you.
Complaints About Invoice Finance, Factoring or Invoice Discounting Companies - ABFA Code Of Conduct & Ombudsman Service
If you really cannot find a solution to your complaint, and your invoice finance company are members of the ABFA (Asset Based Finance Association), the ABFA now have a new code of conduct for members and an Ombudsman supported complaints procedure - we can put you in touch.
However, most of the problems and complaints we hear about invoice finance, factoring and invoice discounting companies are able to be solved by alternative products or alternative providers. All invoice finance companies operate in slightly different ways and that means that you can often find a solution by shopping around, we can help you with this.