Big four bank dumping invoice financing

The rumours have been around for some time and its still a little unclear whether its the whole invoice financing book or just accounts up to a certain size or just the Factoring account, but a major bank is quite a way down the line with the proposed sale.

I know for a fact that a credible buyer is in the process of looking at the detail. That is straight from the guy appointed to do so

Sadly I cannot divulge either identity, but watch this space.

As predicted

CBILs extended

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According to this story. Expected to be until the end of November

https://www.p2pfinancenews.co.uk/2020/09/21/treasury-set-to-extend-emergency-loan-schemes/

If confirmed, this is welcome news. The window for loans has been relatively short and with the major banks rejecting all and sundry on the most tenuous (I would say laughable but toying with someones business and livelihood is no laughing matter) of grounds before the independents had the time to get established, the extension is much needed. Furthermore many businesses are naturally adverse to taking on dent in any form and the relatively cautious (who are likely to also be superior credit risks) shouldn’t be cut off from the scheme by a arbitrary deadline.

In my opinion, the offering has only really just started to become established

Uncovered. An invoice financiers overcharge

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How many businesses take time to check their invoice finance agreements to ensure that they are being charged correctly? Not many and understandably many will believe that the reputable banks and lenders will be charging correctly within the terms of the agreement.

Thats fine but consider PIP. And other charges inflicted upon consumers

The ability to claim was driven by FCA rules and the government who are understandably keen to protect the public but who stands up for businesses? No one, because caveat emptor applies. And rightly so in my opinion.

Its therefore up to the businesses to examine their own contracts but for any business owner, time is always of the essence. That is where I contribute

To give an example. A current client has been heavily charged for “refactoring” over the past thirteen years. The total runs into the thousands and we have a claim

The original agreement does not specify this charge. Neither the (excessive) level or the right to impose. It may be that it was communicated at a later date but that will in itself be contentious

The account is being moved of course and the lender is currently not fighting to retain business (that’s another story). There is no need for an aggressive approach and we will initially move gently and gauge the response.

Success will be partly dependent on seeing the wider picture and knowing the lender. The results will be interesting

Have invoice financiers lost control of their charging?

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Many expected prices to increase following the last few difficult months but is this the right approach?

Look at this example

Service fee now 1.38% new matrix 2.16% – best we leave at previous.
Interest/discount now 3.96% new matrix 5.54%  – best we leave it at previous

This was quoted to a client of mine. They were unhappy and had been charged excessively for disbursements for some period of time and were hopeful of a positive renegotiation. Not much willingness by this major bank to retain this very decent and profitable business

Lenders are quoting higher rates for new clients with a shrug of the shoulders and the spurious claim that everyone is doing so. No doubt that is the line given to borrowers by both the lenders and probably certain brokers too but it is simply incorrect

There are still a number of lenders very competitive on price and appetite. They will not always be the perfect fit for every client but whilst this remains the case (and no reason to suspect it won’t) then they are simply putting themselves outside of the market

That might be deliberate but existing clients should be wary too. A lack of appetite for new business is the other side of the coin of a lack of commitment to existing clients

Can you win business remotely?

A few years ago there was a British Airways TV ad where two sales teams were pitching for a contract in New York (I think). One tried to win through whatever telecommunications were available at that time and the others got on the plane. Its not difficult to guess who won and of course BA were not going to present a different fiction

But also they were correct. Face to face meetings will always hold a significant advantage and with the mania for “work from home” ( or as perhaps some would say ” “work” from home”), the significant but entirely undefinable elements of body language and chemistry are being wrongly overlooked

Does this only apply to external meetings? Not at all

Winning and maintaining clients takes teamwork and communication. Without drifting into dreadful corporate speak, it is essential that the different elements work as closely as possible

Is this possible in the remote working world? Of course it is but with limits and this limits are crucial. We return to the BA ad. Two teams pitching. One working through Zoom meetings and the other huddled in a office

I know who my moneys on and this is the key to the return to offices. I believe that businesses that become too dependent on remote working will gradually not only lose clients or competitiveness but also a sense of unity and focus

And I say this as someone who had no love for the office culture and has worked independently for over 10 years