Invoice finance payments sent direct to supplier?

[jlsb]

Hello

One of our suppliers switched to hsbc invoice financing last year, after a couple of months the invoices changed back to their bank details so I assumed they weren’t using them anymore.

However we have had a letter from hsbc saying we should be paying them and we are still legally liable for the debt even if we have paid the supplier. Is this correct, surely we would need to sign a contract or something or are we potentially liable for the past several months invoices to hsbc even though we paid the supplier?

I guess we should be paying hsbc going forwards?

Any advice would be much appreciated.

Thanks

Lucy

 

[Ian J]

If an invoice contains a notation saying that it is payable to XYZ Factors" then you are legally bound to pay them however if the invoices don't contain that notation you are free to pay your supplier directly.

 

[jlsb]

Thanks for your reply Ian.

There is no reference to hsbc on the invoices so I guess we are all clear and can ignore the alarmist letter from hsbc

 

[Ian J]

I would suggest that you tell HSBC that the invoices didn't have a notification on them which is why you paid the supplier directly as that not only puts your position in writing but also informs HSBC that their client may be up to no good as being paid directly by the customer as well as by HSBC is a classic factoring fraud.

There may well be an innocent explanation but if they are defrauding the factors and HSBC find out they will probably appoint an Administrator