Invoice Factoring Recommendations

[TykeMerc]

Rather than looking at the contractor base who work via agencies, you might be better off looking at those who work direct. For 3% getting the guaranteed payment quicker, that's a price that many would think worth paying.

To be honest, anything less than 3% you might even run the risk that people think it's too good to be true, and that you won't just disappear with the money.

That's true, what's probably a sizable majority of us on here contract via agencies so have a built in Factor already, just some people don't realise it.

For people who aren't using agencies or do a fair bit of client direct work it's a matter of pricing and protection, add enough value and you've a market, not enough and it's a no business scenario.

[smallbusinessdan]

Rather than looking at the contractor base who work via agencies, you might be better off looking at those who work direct. For 3% getting the guaranteed payment quicker, that's a price that many would think worth paying.

To be honest, anything less than 3% you might even run the risk that people think it's too good to be true, and that you won't just disappear with the money.

Direct contractors are hopefully going to be one of our big target audiences, but I probably hadn't considered the significance of Debtor Protection in the proposition. You also make an interesting point on too low pricing, I hadn't even thought of it that way.

You have been a real help, thank you.

Daniel

[TheFaQQer]

FaQQer - Yes, we offering full Debtor Protection insurance backed by one of the big 5 banks. We'll also do all the invoicing and the credit control straight from the time sheet - Ultimately we are looking to give as much value to contractors as possible, for the smallest possible time investment. Worth noting that the 3% is tax deductible, so the real cost is lower than 3%.

It sounds like you're a sophisticated business person, with a good knowledge of these things so thank you sincerely for helping me and giving your insight.

Quick thought - If it were cheaper would you consider it an attractive proposition ?


Thanks

Rather than looking at the contractor base who work via agencies, you might be better off looking at those who work direct. For 3% getting the guaranteed payment quicker, that's a price that many would think worth paying.

To be honest, anything less than 3% you might even run the risk that people think it's too good to be true, and that you won't just disappear with the money.

[smallbusinessdan]

If you are going to include some kind of insurance, then it might be worth it - ie. you advance the money and if the agency / client doesn't pay then it's your problem to chase the debt not mine.

Depending on the size of the client / agency, once you've been trading for a while and built up a bank balance, is there any real need to pay someone 3% for better terms? I'm direct at the moment and my contract says 60 day terms, but the client generally pays in half that time, and I know they're good for the money so I don't worry. If they were smaller, then I wouldn't have agreed those terms anyway.

Not convinced that there is much need for it, to be honest. But you could look at the financials of other people already in this space and see how they are doing before making the leap.

FaQQer - Yes, we offering full Debtor Protection insurance backed by one of the big 5 banks. We'll also do all the invoicing and the credit control straight from the time sheet - Ultimately we are looking to give as much value to contractors as possible, for the smallest possible time investment. Worth noting that the 3% is tax deductible, so the real cost is lower than 3%.

It sounds like you're a sophisticated business person, with a good knowledge of these things so thank you sincerely for helping me and giving your insight.

Quick thought - If it were cheaper would you consider it an attractive proposition ?


Thanks

[TheFaQQer]

Hi

I am considering quitting the day job to to launch a specialist invoice discounter for contractors. We will offer same day payment, with very little paperwork or fuss to contractors invoicing over £5k. We plan to offer same day transfer against timesheets & invoice, charging only a 3% fee per invoice.

I noticed this thread where a conversation had already been started and would love some feedback before i take the plunge, is this something contractors want and would value enough to pay for?

Basically - is there anyone who would think's they'd benefit from this type of service, of should I not quit the day job!?

Thanks

Daniel

If you are going to include some kind of insurance, then it might be worth it - ie. you advance the money and if the agency / client doesn't pay then it's your problem to chase the debt not mine.

Depending on the size of the client / agency, once you've been trading for a while and built up a bank balance, is there any real need to pay someone 3% for better terms? I'm direct at the moment and my contract says 60 day terms, but the client generally pays in half that time, and I know they're good for the money so I don't worry. If they were smaller, then I wouldn't have agreed those terms anyway.

Not convinced that there is much need for it, to be honest. But you could look at the financials of other people already in this space and see how they are doing before making the leap.

[cojak]

That fact that you've dug up a 4 year old thread may tell you something...

[smallbusinessdan]

Is this something people want?

Hi

I am considering quitting the day job to to launch a specialist invoice discounter for contractors. We will offer same day payment, with very little paperwork or fuss to contractors invoicing over £5k. We plan to offer same day transfer against timesheets & invoice, charging only a 3% fee per invoice.

I noticed this thread where a conversation had already been started and would love some feedback before i take the plunge, is this something contractors want and would value enough to pay for?

Basically - is there anyone who would think's they'd benefit from this type of service, of should I not quit the day job!?

Thanks

Daniel

[mahon and co]

Try a good contractors scheme before you sign up to Factoring Invoices

Finally ditched my agent and am contracting direct, however I'm not keen on Clientco's payment terms. Can anyone out there recommend (I'm looking for personal reccomendations here, I can easily google them) an invoice factoring company that they have used?

TIA

They are all quite expensive. But try Bibby's and your own bank's factoring arm.

Alternatively try a contractor arrangement that uses an EBT so you take home after all tax and fees about 80% plus of billings. Some of the better ones even arrange a loan to tide you over.

[rootsnall]

What sort of payment terms are we talking and are client Co likely to go bust any time soon ?

[jetrimby]

HI I've recently had experience with Lloyds TSB factoring and though not the cheapest way to borrow not to bad, very helpful and very polite with clients (they do chase for money BUT dont promise to when selling to you so they are being more honest than some) I have seen them before and, as with most factoring, I dont know anyone who uses them who would not get out if they could.
Lloyds do deal with smaller firms BUT you are then looking at a mimimum fee pm of about £290 which equates to about £230,000 turnover. BUt they are happy to take you on if turnover is £50k (but still same minimum charge so course they are!) but many factoring companies would not look at it at all. If you want an intro PM me At end of day though if you are able to afford it with credit card/loan/overdraft you will find it cheaper to fund the cashflow by other means. Invoice discounting tends to want higher turnovers. Also if going down this route make sure they will lend what you need as you will only have one customer which they don't tend to like (some might say only £5000 per customer therefore £3480pa cost for a £5000 borrowing NOT GOOD!)

[Menelaus]

I'm pretty sure there's a brolly who pay on timesheet, not when paid ... Atlantic(?).

[Maslins]

Do you really mean factoring? Or simply invoice discounting?

The former, the 3rd party factoring company takes over your entire sales ledger, chasing up payment etc.

The latter, all they do is advance you the money (client does not need to know).

What size is your sales ledger? If you're a 1 man band contractor, unless you're charging £5,000+ per week, you really need to be looking at the smallest of factoring/discounting firms to take you on. I'm good friends with a guy who runs a (mainly) invoice discounting firm, but they wouldn't want to get involved for very small credit lines.

[TykeMerc]

I suppose the question really is would factoring cost any less than an agency margin?

I used a factor about 15 years ago for some large hardware and labour supply projects and it wasn't at all cheap at 15% of invoice value, I'm sorry I have no idea how much it costs these days.

If you're going to have to factor because you've cut out the agencies then I suspect you might end up losing out on the deal

[thelace]

Finally ditched my agent and am contracting direct, however I'm not keen on Clientco's payment terms. Can anyone out there recommend (I'm looking for personal reccomendations here, I can easily google them) an invoice factoring company that they have used?

TIA