Beware of factoring - Things they don't tell you at Bibbys

[davek17]

Hi There

I spent a great deal of time choosing a factoring company and now that I have I seem to have made a few mistakes and just wanted to share my experience so that no-one else makes the same. The reason I am writing here is that i have tried in vain to sort out my issues with nothing back form the factoring company.

Firstly beware the salesman. We got totally mis-sold the product. I'm a reseller so for certain small invoices we simply do not have the margin to use factoring without it costing us. This was made very clear, unyet now we are told every invoice has to go through them regardless if it costs us money to do so.

Charges for 24 hour payments
Yes you do get 24 hour payments, they cost £35 each or you have to wait 3-5 days. No-one mentioned this at all, its not in the agreement but its tough. If like me you are relying on fast payment with your suppliers then 24 hours is not an option unless you pay. You also have to manually draw down your money so you are constantly having to go in and do extra work to get it.

Poor service
Our account manager doesn't even know how to use the software we're supposed to use. We have had no training, no-one will help us and we still don't know what we're doing. All Bibby's do is let you make mistakes and then "exception" all your invoices so they can charge you for them but don't bother chasing them or you up. It's harder chasing them up than it is our customers.

Ridiculous workload
We were told we just uploaded our own invoices as PDF's we already generate and use. The reality of this is that we have to do this, we then have to send our invoices via email, then the originals in the post for every invoice separately. I am the only signature allowed on the cover sheets so if i'm out of the office we can't get invoices paid until i'm in the office again.

The workload is not worth the money we pay and we break our environmental policy by doing things in this way. Every time we ring we get something else added to what we have to do.

Hidden charges
There are loads of hidden charges for each invoice and no-one seems to be able to take us through what they are or why. We seem to be paying a lot more than the % we were sold and there is a minimum monthly charge which was not discussed or on the agreement I signed. THey knew full well our situation and the infrequency we would use factoring under, unyet they now seem to think they can charge ridiculous fees for this.

Add to this their staff are calling me and my staff liars stating we have not rung them when we did to address issues. I have already lost 2 customers due to the way they handle and follow up invoices and it really has cost us dear.

When challenged about this all the account manager says is that we signed up and thats it, they don't care about anything other than their minimum charge. I asked for the case to be escalated and so far nothing back. The document i signed is 100 pages long, i had a solicitor look over it which cost me £600 as a favour and I should never have signed it. I did and I hope someone else will learn from my mistake.

I would steer well clear of this company and if you're thinking of factoring then take heed of the things that have gone wrong for us above. It's not for everyone and this certain company simply doesn;t give Two hoots about us.

 

[GRDCredit]

Can you get out of it or are you locked in?

I think my views on factoring have been well covered on here (!) but if you are convinced factoring is the way to go then I would recommend using someone like Ian J (although I have not seen him around for a long time) who acts as a broker and will discover exactly what you need and introduce you to the right company for you.

Key question - do you need immediate payment on your invoices (factoring is for you) or do you just want customers to pay on time (credit control is for you)?

 

[Ian J]

I would suggest that you arrange a meeting with someone senior at Bibby and discuss all of the points and complaints that you have raised here with them.

The computer system that Bibby use is fairly standard throughout the factoring industry so there must be literally hundreds of people within their organisation that know how to use it and you need to insist that someone comes down to run through it all with you.

Again, regarding the alleged hidden charges you need to ask them (in writing) exactly what you are being charged for and how the charges are being calculated as they have full details of all charges on their computer system.

In know that I have a vested interest but cases like this do show the benefit of using a specialist broker as we know the market place well and can advise on the foibles of each different factoring company

 

[Richie N]

We also had issues with Bibby a few years ago, lucky enough we had terminated our agreement before we started processing invoices through them.
In my experience, most factors are the same, they can cause a lot of issues with your customers as well.
We terminated our agreement with Lloyds earlier this year and it was the best decision we made, our invoices are still paid within a reasonable time and we will probably never use a factoring company again.

 

[Maslins]

A friend of mine called Joe Waters works for a fairly small invoice discounting/factoring company called "gener8finance".

They're about as ethical as invoice discounters get, with a simple pricing structure (though quotes are tailored to individual businesses circumstances), and they don't make your life difficult if you want to leave.

I recommend them highly.

 

[Maslins]

As an aside, make sure you know the difference between:

"invoice discounting" where they advance you funds but do not get involved in your actual credit control (so often your customers do not need to know), and

"factoring" where the firm takes over your credit control, chasing debts etc. People have mixed views on this, on the one hand it takes a fairly unpleasant task off your hands, but it doesn't tend to go down very well with your customers.

 

[davek17]

Cheers for all the replies guys

All great advice and one of my customers actuallytold me this week that his factoring was set up through a broker who got him exactly what he wanted.

I think the phrase "Credit control" is really key here, whoever mentioned this I think has hit the nail on the head as its a really key point I missed. Credit control is what we need, not factoring and I wish i'd known about it earlier. I didn't know you could get that kind of service. The trouble is you're so busy running your business that finance like this is something I will never understand 100% and I feel that I have been taken advantage of. Small businesses should not have 100 page contracts written in legal script to sign, it's unfair.

The Bibby's panel is indeed the standard, we got some advice on it about 2 months after we posted our first invoice, i'm not knocking the software however every time we post something we're asked for something new, it's different every single time!!!

I'm trying currently to get in touch with someone senior with no luck so far. I'll keep people updated if I hear anything.

 

[Big Pete]

Factoring i always associate with Companies with no substance , Hate Suppliers who use any Factors , reason being any mistakes on Invoicing they tend to ignore you get pestered and hassled the moment any Invoice gets to be 31 days old ...

If 2 Suppliers doing the same product are around the 1 who doesnt need or choose to Factor gets my Business every time

So Factoring is a last resort Finance choice in my eyes ..

 

[GRDCredit]

Credit control is what we need, not factoring and I wish i'd known about it earlier.

Where is the bursting into tears icon!!

 

[Ian J]

"factoring" where the firm takes over your credit control, chasing debts etc. People have mixed views on this, on the one hand it takes a fairly unpleasant task off your hands, but it doesn't tend to go down very well with your customers.

If a debt is overdue and needs chasing most companies couldn't care less whether it's the supplier or the factor who chases them

 

[Ian J]

you get pestered and hassled the moment any Invoice gets to be 31 days old .....

It always makes me smile that the two biggest objections people have to factoring are:-

1) You get pestered and hassled the moment any invoice gets to be 31 days old

2) The factoring company's credit control is useless and they never actually do any chasing

 

[JEREMY HAWKE]

We factored in the boom years (hey anybody remember the good times !!) with Lloyds TSB and it was a night mare I dont like factoring at all. It almost feels that a company that starts factoring is about to end up on the scrap heap .!!!

Of course for those that dont want any personal risk you are personally liable should it all go wrong .If you are limited you have to signed a dg and who wants to do something like that these days!!!

Furthermore when a company sees a factored invoice they see it as a green light to pay as late as possible .

 

[yorkshirejames]

Factoring i always associate with Companies with no substance , Hate Suppliers who use any Factors , reason being any mistakes on Invoicing they tend to ignore you get pestered and hassled the moment any Invoice gets to be 31 days old ...

If 2 Suppliers doing the same product are around the 1 who doesnt need or choose to Factor gets my Business every time

So Factoring is a last resort Finance choice in my eyes ..

Indeed. I know quite a few large companies who will not touch small companies who factor (I guess this is due to the perceived extra hassle).

 

[Geoff T]

Where is the bursting into tears icon!!

Have they put that in yet??:|

 

[Williams lester]

Have they put that in yet??:|

Will this do?

 

[davek17]

Cheers everyone for the posts, I still haven't had anything back from Bibby's and guess the moral of the story is to learn what you can here and be careful!

I'll write an email to their directors when I get time but until then I hope for nothing more than being ignored.

 

[SaraR0112]

I was speaking to a company a couple of months ago who was using Bibby for their factoring. They had an outstanding 50k debt from a company so wanted to see their report. The started dealing with this company in October 2008 after having the go ahead with bibby. When looking at the companies report on our system they found out that the company have over 80k ccj's from March 2008 and Bibby still gave them the go ahead to do business with them. As they had reached their limit with bibby, they couldn't get any more money off them until this customer had paid their invoice and that didnt look to good until I told him about our debt collection service. Please be careful when factoring might be a good idea if you asked to see the report

 

[davek17]

Hi SaraR0112

You've made a really great point. To expand on our experience of this, we had an issue with posting invoices and the point at which we did it. You can't post an invoice before you have delivere dthe goods but we still wanted to post the invoice as early as we could so that Bibby's would yay or nay it before we delivered the goods....reasonable yes?

However the process is not like this, they basically told us that they would factor anything so just do the business and send it over.

We use a credit reference tool anyway, Creditfocus. We would simply not go ahead with an invoice if it was too risky and genuine companies always pay up front anyway if you ask them to do so.

However the issue is that in my view Bibbys are doing exactly what you have stated. They actually don't care about anything other than getting the debt and then just sending it back to you after 90 days. They've taken their cut and just ask for it back and if you can't pay they take your home!!

I think we're just going to pay the minimum monthly payment and hopefuly get out after 12 months, although I have hear horror stories about doing this, with companies getting locked in eternally.

DaveK17

 

[Ian J]

I was speaking to a company a couple of months ago who was using Bibby for their factoring. They had an outstanding 50k debt from a company so wanted to see their report. The started dealing with this company in October 2008 after having the go ahead with bibby. When looking at the companies report on our system they found out that the company have over 80k ccj's from March 2008 and Bibby still gave them the go ahead to do business with them. As they had reached their limit with bibby, they couldn't get any more money off them until this customer had paid their invoice and that didnt look to good until I told him about our debt collection service. Please be careful when factoring might be a good idea if you asked to see the report

Sorry for the late response but I've been away. Some may consider it semantics but Bibby didn't "give them the go ahead to do business with them" but stated that they would be willing to fund invoices up to a certain value - which is completely different.

we had an issue with posting invoices and the point at which we did it. You can't post an invoice before you have delivere dthe goods but we still wanted to post the invoice as early as we could so that Bibby's would yay or nay it before we delivered the goods....reasonable yes?

Highly unreasonable as an invoice is just a piece of paper that has no intrinsic value unless the goods detailed on the invoice have been delivered whereupon it becomes a valid debt.

There is no respectable factoring company in the country that would fund invoices prior to the goods being delivered.

 

[davek17]

Hi IanJ

The point I was making here is just that. I never got an answer out of the salesperson on how the service worked, but I asked the question of how would I know if they would factor an invoice on me actually making the sale. There would have to be some kind of conversation with Bibby's in order to verify that "if" I went ahead with the sale then they would factor it. This is not the way it works in reality as Bibbys get plain peeved with you if you keep ringing to check if the debt will be OK or not.

The answer I got every time was that they factor everything, unless it is a severely bad company or the debt broke the terms in some way.

Bibby's don't credit check companies, they told me this and I have to do this myself. Now whilst I would always do this anyway, it does prove to me that they will take on any debt, take the charges and then pass the debt back to you after 90 days. THe feedback I am getting form my customers is god awful which further makes me realise that they actually don't care at all about my business.

They just want theior charges and trhey don't care how they get them.

 

[thatsjustbad]

I am suprised there are not more people on here shouting about this. I am in agreement with all your posts.

I will just read all of them and come back to you about Bibbys!

 

[thatsjustbad]

It always makes me smile that the two biggest objections people have to factoring are:-

1) You get pestered and hassled the moment any invoice gets to be 31 days old

2) The factoring company's credit control is useless and they never actually do any chasing

If you are supposed to be a founder of an organisation that protects people from the poor servicing that we get from factoring Companies then I have to say you are not doing a very good job!

Its not easy running a business and without the proper help out there is it is heart breaking, factoring companies dont make things easy on you either!

 

[Ian J]

If you are supposed to be a founder of an organisation that protects people from the poor servicing that we get from factoring Companies then I have to say you are not doing a very good job!

I have nothing to do with any organisation "that protects people from the poor servicing that they get from factoring companies" at all and don't think that any such organisation exists

I am suprised there are not more people on here shouting about this. I am in agreement with all your posts.

I will just read all of them and come back to you about Bibbys!

I assume that you will be doing this anonymously

 

[Gillie]

I am suprised there are not more people on here shouting about this. I am in agreement with all your posts.

I will just read all of them and come back to you about Bibbys!

Perhaps there are not more people shouting about it, as either they don't factor, or perhaps they factor with someone they are happy with ... there are such around you know!!

 

[Ian J]

Perhaps they factor with someone they are happy with ... there are such around you know!!

For those that don't know much about the factoring world Bibby (as the subject of this thread) is the largest independent factoring company and has over 3,500 clients so there are bound to be the odd one or two that have found something to grumble about

 

[thatsjustbad]

People are just scared about rocking the boat! or as in my case don't have the time as running a business in today's climate is a lot of work! I have just managed a day off for the first time in years! And yes, thank you I am running the business fine!

Quite agree with your sentiment that there are always two sides to every story, I am sure (Bibbys) are doing a great job for their clients, but not everyone can have a 100% record. I have wondered why I have not written on a blog/forum before, it's down to time I am afraid! This maybe the case with so many more Owner/Managers etc.

 

[GRDCredit]

Not sure this new poster warranted any sort of response but he is probably gone now, never to be seen again!

 

[GRDCredit]

People are just scared about rocking the boat! or as in my case don't have the time as running a business in today's climate is a lot of work! I have just managed a day off for the first time in years! And yes, thank you I am running the business fine!

Quite agree with your sentiment that there are always two sides to every story, I am sure (Bibbys) are doing a great job for their clients, but not everyone can have a 100% record. I have wondered why I have not written on a blog/forum before, it's down to time I am afraid! This maybe the case with so many more Owner/Managers etc.

So you had a day off today for the first time in year and decided to come on here for the first time!

 

[thatsjustbad]

Looks like will be for some time, this forum is great! Useful tool provokes a thoughtful and sensible debate!

 

[thatsjustbad]

When I say "Day off" that was supposed to mean working from home, do owner/managers ever get the time off?

 

[gessoandgold]

Time off - that's when you unplug everything and spend some time feeling horribly guilty and pointless, right?

 

[thatsjustbad]

Yup, that would be the feeling, I think you know what I am talking about! A thought often "thunk" about amongst business owners...

 

[seanstevens]

Personally not a fan of factoring, but in the past have heard both very good and very bad things about most of the larger factoring companies.

 

[thatsjustbad]

I have factored with some smaller Companies in the past, such as Potential Finance and then moving on to the larger brands such as Lloyds TSB, RBS Invoice Finance and have heard about others.

As they often say "One shoe size does not fit all!" (well someone has somewhere said that ).

There will always be good and bad stories, but like anything in life; it's what you make of it.

Do you let it get the better of you?, when an issue comes up, take it up, complain, sort it out, you are after all the client/customer. Don't stop until someone somewhere does listen to you.

In most cases you will find the men amongst the boys as some factoring companies do listen to some things and try and resolve issues. We used factoring combined with the Purchase order facility that was on offer, our Company was expanding rapidly and needed additional finance, it grew from £65k to £1.9m then £3.9M in three years in T/O and this year to much more more than £15m. (UK business only)

I have found that you need to work with people as "partners!" when that happens, the sky is the limit!

Good luck to all those who choose factoring as the way forward, please make sure you do your home work! One more bit of advice, don't listen to people who say "factoring is for those who are unstable or show they are not a company do be dealt with".

Like I said "life is what you make of it", so is YOUR business, do what you have to, make that dream happen for you, after all those people won't pay your mortgage, you have to!

Best of luck!

 

[seanstevens]

I have factored with some smaller Companies in the past, such as Potential Finance and then moving on to the larger brands such as Lloyds TSB, RBS Invoice Finance and have heard about others.

As they often say "One shoe size does not fit all!" (well someone has somewhere said that ).

There will always be good and bad stories, but like anything in life; it's what you make of it.

Do you let it get the better of you?, when an issue comes up, take it up, complain, sort it out, you are after all the client/customer. Don't stop until someone somewhere does listen to you.

In most cases you will find the men amongst the boys as some factoring companies do listen to some things and try and resolve issues. We used factoring combined with the Purchase order facility that was on offer, our Company was expanding rapidly and needed additional finance, it grew from £65k to £1.9m then £3.9M in three years in T/O and this year to much more more than £15m. (UK business only)

I have found that you need to work with people as "partners!" when that happens, the sky is the limit!

Good luck to all those who choose factoring as the way forward, please make sure you do your home work! One more bit of advice, don't listen to people who say "factoring is for those who are unstable or show they are not a company do be dealt with".

Like I said "life is what you make of it", so is YOUR business, do what you have to, make that dream happen for you, after all those people won't pay your mortgage, you have to!

Best of luck!

Seems like you have had some time to let it all sink in. A decent, well balanced post.

 

[Ian J]

There will always be good and bad stories, but like anything in life; it's what you make of it.

One of the reasons why factoring gets such a relatively bad press on internet forums is that people who are happy with their facility don't search out forums to praise their factoring company so the comments tend to be rather one sided

 

[SaraR0112]

Sorry for the late response but I've been away. Some may consider it semantics but Bibby didn't "give them the go ahead to do business with them" but stated that they would be willing to fund invoices up to a certain value - which is completely different.

Bibby did give him the go ahead to do business with the company hence why he invoiced the them 50k. This is why he was so shocked when he found out the situation the company was in. He now has had to get Debt Collectors in to chase the invoice for him and cannot factor anymore invoices as he has reached his limit with Bibby

 

[thatsjustbad]

Sorry for the late response but I've been away. Some may consider it semantics but Bibby didn't "give them the go ahead to do business with them" but stated that they would be willing to fund invoices up to a certain value - which is completely different.

Bibby did give him the go ahead to do business with the company hence why he invoiced the them 50k. This is why he was so shocked when he found out the situation the company was in. He now has had to get Debt Collectors in to chase the invoice for him and cannot factor anymore invoices as he has reached his limit with Bibby

Welcome back from wherever you were, I am new here, but, I know for a fact that Bibbys are proactive and allow you to do business with anyone you want to. They do however tell you, that you have to Credit Insure yourself if you want to trade with that company. This depends on the type of finance you have Recourse or Non-Recourse. if its the latter the risk is yours, so be careful and check things out. Bibbys are there to fund the business, not run it for you and make the hard choices or take the gamble, I am sure this applies to most if not all finance houses!

Good luck!

 

[thatsjustbad]

One of the reasons why factoring gets such a relatively bad press on internet forums is that people who are happy with their facility don't search out forums to praise their factoring company so the comments tend to be rather one sided

Does this not apply to most things in life, sadly? It would help a lot of small companies grow, if some of their customers praised the hard work they do. It may also be worth while if the company tries to communicate with their customers to get some reviews in writing, by offering comps, newsletters, but at all times, they should be open to both good and bad. We all learn every day and who better to teach us than those we supply to!

 

[AnnaPop]

Factoring doesn't suit everyone, but is well suited to people with a fairly solid client base and a longer payment terms. I run a recruiment business and find that it bridges the gap between paying contractors and temps and when I get paid by the client. Ian J is correct most people don't have a bad experience of factoring firms and it is just the people who take the time to complain that do. This website, you can get a guideline quote and then they will contact the factoring companies on your behalf find the best quotes for you www.factoringquoteuk.com (the factors know they are competing with other companies and so will do their best to give a well priced quote). I think there are a couple of others out there one of them is in bed with Lloyds though - Simply Business so don't bother with them. Generally the finance companies offer a muich better service than the banks