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Factoring In The Modern Financial Market

The Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2022-2027 predicts that the factoring market is poised to grow by GBP 1214.81 bn during 2021-2025.

As banking relationships become increasingly strained, with banks looking to reduce their exposure to risk and break relationships that have become unprofitable factoring companies are uniquely positioned to look past numbers and to support individuals with personality, drive and commitment listening to their experience over recent years and their projections for the future.

Whilst companies that rely heavily on personal interactions and travel have found it particularly difficult during the Pandemic where sales were more than 50% lower than normal there are some encouraging signs emerging. Many sectors are becoming a lot more buoyant and there are some positive signs. Companies and their staff have become more adaptable in a new way of working and networking where necessary is the highest it has been for several years.

But that having been said it is generally accepted that it will take years for a full recovery, and it will depend upon customers willingness to spend money on leisure amid a downturn that has triggered salary cuts and redundancies.

That’s why striking the balance between preserving customer relationships and cash flow is imperative to ensure that strong working relationships built on understanding each other’s business is necessary.
Due diligence and communication are of paramount importance. The experience in credit control that can be gleaned from Factoring companies goes further than traditional high street banks as experienced factoring companies not only take on the often-time-consuming task of collecting the outstanding sales invoices of the business, but they can also provide valuable advice and insight to their clients regarding their credit strength.

But it’s not all doom and gloom as the pandemic has also accelerated growth and demand in some industries for example for carriers like Amazon, meal delivery services and many other e-commerce delivery companies.

The shift from shopping at grocery stores to receiving premade meal kits through the post will continue well beyond the pandemic. The consumer as with businesses have found a new way of working and the very agile ones, will be the ones who can adapt to change the quickest and have the best chance of business survival.

Factoring companies are not only relevant to struggling business, but they are also there to support companies experiencing rapid growth where “opportunity” can place strain on their cash flow.

As factoring transactions are transactions of sale and not a loan, there is the added appeal that this type of factoring, unlike other types of finance factoring, does not result in an increase in liabilities of the business nor is there any requirement of collateral.

The industry also anticipates an increase in acquisitions and buyouts. Factoring liquidity that offers more room to manoeuvre can contribute to larger buyouts and for a company looking to sell, presenting themselves debt free can potentially achieve a higher sale price and makes them more attractive to a potential buyer.

The bottom line is that factoring will play a larger role in helping companies improve their chance of success during this time of economic uncertainty.

Factoring companies are uniquely positioned to look past numbers, to make prompt arrangements for finance much more quickly than banks.
They are also acutely aware that longstanding relationships with their customers works in their best interests too, so adding value to their clients beyond the immediate finance options is crucial. They can offer guidance to their clients about market trends for their products and services and assess credit worthiness of customers.

Here at Mansfield Solicitors and Advocates, we have a wealth of experience in dealing with the recovery of factored invoices. We currently assist companies across many business sectors. We are very happy to litigate where necessary and our staff have the experience to handle all types of legal issues that may arise.

If you are a company currently struggling with the recovery of outstanding invoices or maybe it is something that you haven’t previously considered and are interested in discussing this further, please do not hesitate to contact Anna Comerford on 0203 772 672 or through our contact page.