- 09 Jan
Finding An Invoice Factoring Broker
I saw an interesting example of how people try to find a factoring company recently, that only confirmed what a muddled process prospective clients can find themselves going through. It reminded me of this picture that I took recently, inside a shop in the south of France!
I noticed a post on one of the social media sites, where a construction sector company were asking if anyone knew of a good factoring company, to replace their current providers. Somebody I know had commented, hence it appeared on my feed.
Our Research Based Invoice Factoring Brokerage Service
I posted a link to our research archive about invoice finance services but not much of a sales pitch to be honest. To my mind, if you want to buy a service, a good place to start would be looking at some independent research about what people think of particular offerings, and how costs compare.
How Other Factoring Brokers Do It
It was interesting to see the various other comments appear that people added to the post. The development of which reminded me how random the process of finding a factoring company can be.
The next comment was from an invoice factoring broker, claiming to have "access to the whole market" and offering an introduction to the "best options that are bespoke to you", via their "free and independent" service. Nothing wrong with that, very similar to how we would describe our service but it made me wonder if they truly accessed all the market, or dealt with a fewer number of key providers (as most brokers do) but it would probably be easy for any of us to say that we had access to the whole market. In terms of "bespoke" options, I guess pricing is almost always bespoke to a particular prospect. I think that relatively few factors are capable of delivering a truly bespoke factoring service. However, there are some that can.
Then a person from a factoring company commented, suggesting a particular factoring broker. I may be being unfairly cynical, but I wondered what the criteria would be for that recommendation. Most probably that the broker refers to that factor. The broker then added that they had just "funded a business very similar to yours" and adding that they had "lots of experience helping businesses that raise interim applications". Well that bodes well, the idea that a broker has helped similar businesses is a positive. It occured to me that this was perhaps a warmer, alternative way of promoting the broker's business, rather than just describing the service.
Another broker then commented, saying that they had experienced "both sides of the fence" and hence "knew the pitfalls". I presume this means having used factoring as a client and then introduced business as a broker. That seems a strong argument, however it only gives you experience of having used one (or possibly) a couple of factors - and most brokers have worked for at least a few different factors. Fear is always a strong motivator, and the ideas that there are pitfalls is likely to be compelling. In reality there are some pitfalls to avoid, so this kind of broker support will be invaluable.
A Recruitment Company's Perspective
Someone from a recruitment company then commented, saying that selecting an "invoice finance company is a very personal choice". I would agree with that, there are vast differences in approach, costing, process, risk appetite and product, between providers. The recruiter then went on to suggest using a good broker that understands your business and knows the marketplace. That started me thinking about how most brokers come to know the marketplace. In our case we have conducted a lot of research e.g. service quality monitoring of existing clients already using these services (not just our own clients) and mystery shopper price comparisons. I am sure that not all brokers have taken such an objective, and structured, approach to the process.
Next, a client of one of the larger independent factoring companies said they were "very happy" with the service they are receiving and hence recommended their factor. Great to hear a client recommending the service. Overall our studies found that 98% of existing users were prepared to recommend their provider. However, once again, this only pertains to one particular provider and it is not a case of "one size fits all". However, there is nothing better than the advocasy of happy clients!
Lastly, someone from yet another brokerage put forward the contact details for one of their own colleagues. That makes it easy to make contact - you don't have to find websites, the number is there.
The Muddled Process Of Finding Factoring
What I took away from the dialogue was what an random muddle the whole thing is, probably a microsm of how people find their way to factoring generally. A simple question leading to a myriad of different suggestions and recommendations, based on all sorts of bits of the puzzle e.g. who I have used in the past, who I am using at present, who has helped a client similar to the one in question, who is best at pitching their service to a prospective client, with a compelling "elevator pitch".
Not to mention the vast array of factoring product options that any new customer is confronted with.
It also reconfirmed to me that we have taken the right approach with our own invoice factoring brokerage. We have the experience of the market, having worked in a number of different factoring companies, but we also have that body of market research to rely upon, giving us an objective way of finding the best factoring company for our client.
If you need help we can call you back or you can call Sean on: 03330 113622.