• Invoice Discounting Client Life 73% Longer Than Factoring

    Invoice Discounting Client Life 73% Longer Than Factoring

    Continuing to analyse the results of our market research survey of 100 existing invoice finance clients and I looked at the split between factoring and invoice discounting users.

    Of the respondents 54% used invoice discounting and 46% used factoring - a relatively even split with a slight bias towards ID. I went on to analyse the time that each respondent had used the service with their existing invoice finance company.

    The average client lives were as follows:

      • Invoice Discounting (56%) - Average client life with existing provider - 3.8 years
        • Factoring (46%) - Average client life with existing provider - 2.2 years

        It must be remembered that this is a snapshot of the position as at the time of our survey - some of these clients will continue to use these services beyond their current client life and this will drive the results up if you were to look at the average using only clients that had finished their client life. Having said that, it is a testimony to how long clients continue to use these services despite most companies allowing clients to leave the service via termination way before these periods of time. Typically a client can terminate an invoice finance facility with between 1 to 6 months notice depending upon the provider (some services can be ceased immediately at the client's discretion).

        The results show the client life for invoice discounting clients to be 73% longer than for factoring products which is a significant difference. Your first thoughts might be that clients are happier with invoice discounting than with factoring but that does not appear to be the case. In fact the factoring clients in our poll scored their satisfaction with their invoice finance company 16% higher, on average, than the clients that were using invoice discounting products.

        Anyone have any thoughts or theories?

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      acg
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