Factoring Companies Guidebook

Listed below is a list of specific industries and the issues Factors and Discounters face when funding a Client in that industry. The list of each is not exhaustive but is typical of the Risk Issues that may exist.

Beer/Wine Merchants

• Bonded Stores
• Retrospective Rebates
• Breakages
• Empties
• Sale or Return
• Debtor Quality
• Debtor Contact i.e. bars/cafes
• Reservation of Title

Builders Merchants

• Low Average Invoice Values
• High Volume of Transactions
• Direct Deliveries
• Retrospective Rebates
• Trade Federations/Buying Societies
• Debtor Quality

Contract Cleaning

• Contract Terms
• CIS Certification
• Advanced Billing
• Proof of Debt
• Preferential Creditors

Computer Hardware

• Training Invoiced in Advance
• Maintenance Agreements
• Equipment Hire
• Rental Equipment
• Sales to Finance Houses
• Installation
• Deposits/Stage Payments
• Warranties
• ROT

Computer Software

• Product Disputes
• Training
• Licenses/Distribution Agreements
• Retrospective Rebates
• Maintenance Agreements
• Bespoke Products/Single Products
• Fashionable/Seasonal Products
• Short Product Life
• Sale or Return
• Faulty Return - how to test?
• Warranties
• Fraudulent Copies
• Copyrights
• Dependence on Key People

Construction

• Retentions/Deposits
• Contract Terms
• Stage Payments/Invoicing
• Self Billing
• Quantity Surveyors Valuations
• Contractors Discount
• Reconciliation of Cash Receipts
• CIS Certification
• Proof of Delivery

Engineering

• Free Issue Material
• Re-Works
• Consignment Stock
• Tooling
• Scheduled/Call off Orders
• Bill and Hold (Constructive Delivery)
• Age/Condition of Machinery
• Environmental Risk
• Deposits
• Stage Payments
• Tooling

Flooring Contractors

• CIS Certification
• Stage Payments/Deposits
• Contract Terms
• Retentions
• QS valuations
• Installation
• Quality of Labour

Food

• Low Margins
• Perishables
• Concentrations
• Retrospective Rebates
• Product Liability
• Debtor Quality

Free Newspapers

• Proof of Debt
• Advanced Billing
• Duplicate Invoicing
• Circulation Disputes
• Quality of Print/Advert

Fruit Importers

• Perishables
• Warehousing of Stock
• Balance of Imports not pre-sold
• Reserve Price Invoicing
• Seasonal
• Proof of Debt

Franchises

• Title of debt
• Refer to Relevant Industry

Furniture Manufacturers

• Free Issue Material
• Product Disputes
• Part Deliveries
• Returns or Reworks
• Guarantees
• Self Billing
• Fire/Health Regulations

Garden Equipment Distributors

• Seasonal
• Extended Terms
• Direct Deliveries
• Customer Orders via Suppliers
• Contract Terms
• Stock Cleansing

Haulage

• Contract Terms
• Contra Accounts
• Major Fuel Creditor
• Insurance/Counter Claims
• Storage/Warehousing Invoices
• Operators License
• Carriers Liens
• Leasing Commitments
• Sub-Contract Drivers
• Low Margins
• Reliance on Major Contracts

Hosiery Manufacturers

• Seasonal
• Call-Off Orders
• Licenses
• Contractual Terms
• Concentrations

Jewellery

• Sale or Return
• Self Billing
• Concentration
• Contra Trading
• Seasonal
• Debtor Quality

Marketing/Advertising

• Intangible Product
• Retainers
• Deposits
• Advanced Billing/Pre-invoicing
• Stage Payments
• Quality of Debtors
• Title of Debt

Meat Trade

• Perishable/Shrinkable
• Product Liability
• Van Sales/Collections
• Returns Deducted from next sale
• Low Margins
• Seasonal
• Cyclical Pricing
• Highly Regulated
• Contra Trading

Perfume Manufacturers

• Free Issue Material
• Contract Filing
• Flammable Insurance
• Product Liability Insurance
• Formulations
• Licenses
• Seasonal

Plastic Injection Moulder

• Tooling
• Contract Terms
• Call off Orders
• Bill and Hold (Constructive Delivery)

Print Industry

• Bill and Hold
• Free Issue Material
• Paper Invoiced in Advance
• Large HP Commitments
• Tooling (artwork, proofs, plates etc)
• Call Off Orders
• Delivery to Finisher/Mailing House
• Scheduled Orders

Rag Trade

• Credit Note Levels
• Sale or Return
• Seasonal/Fashion
• Forward Dating
• Consignment Stock
• Free Issue Material
• Self Billing
• Debtor Quality
• Blanket/Scheduled Orders
• Samples/Invoiced if sold
• Agent Sales

Seed Fertilizers

• Seasonal
• Extended Terms
• Pallet Returns
• Debtor Collection
• Product Liability
• Overly Spread Ledger
• High Volume/Low Value Invoices

Stationery

• Call Off Orders
• Bill and Hold
• Advanced Billing
• Artwork (customer's)
• Humidity Control

Steel Stockholders

• Contra Trading
• Free Issue Material
• Bill and Hold
• Extended Terms
• Consignment Stock

Suppliers to DIY and Large Retailers

• Shelf Clearance
• Sale or Return
• Contract Terms
• Retrospective Rebates
• Advertising Contributions

Textiles

• Free Issue Material
• High Potential for Disputes
• Seasonal
• Call Off/Blanket Orders
• Self Billing
• Sale or Return
• Bill and Hold

Timber Merchants

• Debtor Quality
• Direct Deliveries from Dock
• Storage - Carrier's Lien
• Imports - VAT Bond
• Quality Grading
• Agency Agreements
• Bill and Hold
• Substandard Load Price Adjustments
• Bills of Exchange
• Contra Trading

Tool Manufacturers

• Deposits
• Stage Payments
• Free Issue Material
• Commissioning
• Reworks
• Warranties
• Non-Delivery

Toys/Cards

• Seasonal/Fashionable
• Sale or Return
• Stock Cleansing
• Debtor Quality
• High Credit Notes - post season
• Retrospective Rebates
• Exchanges
• Advertising Contributions
• Self Billing
• Mail Order

Vehicle/Plant Hire

• CIS Certification
• Insurance Claims
• Hire Extensions/Continuous Hire
• Validating 'Off-Hire'
• Deposits
• CPA Conditions.