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Independent brokers or not?

I have taken the liberty of copying this piece from another website. I will be selfish and not link because effectively they are competitors of mine and whilst it isnt well written the sentiments are accurate

Regulation of factoring brokers

Unfortunately there isn’t any regulation of factoring brokers which means that anyone can call themselves an invoice finance broker and dispense advice whether they know what they are talking about or not. Poor advice may well work out very expensive for a company and in some cases by introducing a company to one of the poorer performing factoring companies the results of that advice could be terminal for the client as many of the factoring companies desperate for business are happy to sign now and perform the due diligence once the ink is dry causing untold problems if they find that not everything is to their complete liking

In this age of the internet there has been a large increase in so called “internet brokers” who are in reality nothing more than lead generators capitalizing on some web design skills. The lack of any form of regulation within the industry means that someone with little or no experience of the factoring industry can design a catchy website bandying about such terms as “experienced”, “independent” and “impartial” in order to convince an unsuspecting company that they are a worthwhile company to deal with, but in most cases they are just passing the leads generated onto someone else.

I would add a few points to this

– Experience of “the industry” should not be a pre-requisite. In fact there are various reasons why i believe it can be a negative, the most significant of which is the nature of developed cosy relationships. A little distance is important I believe and most lenders would hopefully confirm that I am far from a back slapping golfing boozing insider

– Factoring service is an issue and one I am aware of but the emphasis here is on collections. My view is wider and most of my arrangements retain the credit control “in house”. The biggest factor (excuse expression) in wrecking a business is being tied into an inappropriate contract where the clients facility needs are not supported. Lenders vary wildly on what they will lend against and how. The biggest challenge in ensuring this is ‘squared off’ beforehand

– Certain lenders can in fact profit considerably from a businesses failure. Others take a longer term view and believe in support. Some lenders will be difficult with termination of contracts ( the large banks often the worst) wheres others can be surprisingly helpful

– Is a contract always the best solution? Many brokers will only consider this for obvious commission reasons but the objective should be a longer term client relationship

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