• Should I Stay If My Factoring Company Reduces It's Price?

    If your factoring company reduces their price should you stay?We had a meeting today with one of our funding partners, and one of the topics that came up was clients that they quote for that decide to stay with their existing factoring provider.

    Matching Prices With Competitor Factoring Companies

    This normally happens when the existing provider decides to drop their fees in order to match a competitive offer received from a new funder. As brokers, we are regularly involved with sourcing quotes for existing users of invoice finance that are looking to check their rates against the market.

    Typically, we have managed to find a 31% average saving on quotes received elsewhere (updated October 2019). Sometimes, rather than just move to the cheaper funder, a client will decide to go back to their existing invoice finance company, and ask them to reduce their price. This situation was outlined by our contact at our funding partner.

    Arguments For Moving

    He had been involved with quoting for a deal recently where the incumbent factoring company had been charging significant fees. He had offered a significant reduction in fees to the prospect, and then the incumbent factor had decided to drop their rates in order to retain the deal.

    The scenario that he outlined was one where that prospect requires some form of additional service from their existing factoring company in the future. This could be if they find themselves in a tight cash flow situation, and require an overpayment. He was of the opinion that because the incumbent factoring company had had to accept vastly reduced rates, they were likely to charge a significant fee for any additional services.

    Possible Service Level Changes

    The other point that he made about such situations was generally regarding the level of service received. If you are paying a given fee for a credit control service, and then the fee is vastly reduced as a result of a competitive quote, are you still going to receive the same level of service?

    I suspect that the answer to these questions is that it very much depends on who the factoring company is, as to the approach that they will take to charging for additional services and providing the credit control service. However, these are factors that prospective customers may want to consider before they make the decision to stay where they are, at reduced rates.

    Moral Argument

    There is also a moral argument. If a provider (of anything) was happily charging you significantly more, do you want to stay with them at a lower fee that you only achieved by threatening to leave after getting a competitive quote?

    Factoring Company Service Levels

    As we have said many times before, with services such as factoring, it is not just a case of sourcing the finance at the cheapest possible cost. You are receiving a full service, including credit control and bad debt protection in some cases. So you may want to ensure that you are getting a decent quality service, rather than just the cheapest that is available.

    If you need help comparing your existing factoring or invoice finance rates to the market, please call Sean on 03330 113622, and we will happily conduct a no obligation rate comparison search for you.

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Examples of just a few of our finance partners:

hitachi
pulse cashflow finance
funding invoice
acg
marketfinance
metro bank sme finance