Home > Uncategorized > A cautionary tale. How not to sign an invoice financing deal

A cautionary tale. How not to sign an invoice financing deal


This is an interesting case. The article is clearly and perhaps understandably pointing the finger at the lender who have certainly acted in a more than insensitive manner. The alacrity of attempting to appoint an insolvency practitioner disgusts and clearly once again brings to the fore the unhealthy relationships between some IPs and lenders

Unhealthy to the extent that I gladly walked away, with a loss of income, from one particularly seedy offer

But there is the issue of Buyer Beware and these quotes stand out

In July, Crystal Print secured an agreement to have 85pc of the value of its invoices advanced. However, Ms Charnley claims Bibby advanced much less than agreed

This is incorrect. The agreement is to lend against debtors on certain conditions. These conditions can be addressed before signing the agreement and they should have been. I am bound to say it of course, but this is where the brokers role is vital. It can be catastrophic for many businesses to be beholden to restrictions on funding that they cannot manage

This is something which can be absolutely nailed down at a very early stage.

The company signed a ‘confidential factoring’ agreement, whereby Bibby collects debts in the name of the client. However, Crystal Print director Colin Charnley said he thought he had been sold an invoice discounting deal, where clients collect their own debts.

Misled? Maybe but unlike with consumer protection there is no excuse for not checking the detail. Frankly the nature of the arrangement would have been very clear from the paperwork

Invoice financing is arguably the most vital agreement any business will enter into. It is the lifeblood and too frequently lenders have failed to understand the implications of their somewhat double glazing style salesmanship. Too frequently lenders see businesses as commodities to be treated as potential for the backslapping suits to get their noses in the trough.

With my own background being commercial rather than banking I will naturally gravitate to those that have their house on the line.

A broker’s loyalty is to the party that has given them their trust. I cannot look a client in the face unless I have found the very best arrangement for all their requirements

All the issues above could and should have been addressed. A lot of pain would have been avoided

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