Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Commentary: A worrying new factor

Tuesday 09 March 1993 19:02 EST
Comments

Your support helps us to tell the story

From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.

At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.

The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.

Your support makes all the difference.

Small businesses have had problems enough in this recession. A new spectre has arisen to trouble their nights. For the first time in living memory a factor, London & Provincial, has gone into administration with debts of pounds 4m, leaving behind a trail of extremely worried entrepreneurs.

Factoring and invoice discounting have always been held out as the way to ensure - at a price - that small companies get paid in full. An arrangement fee varying from 0.5 per cent to 2.5 per cent secures 80 per cent of debts outstanding. Financing costs around 3 per cent over base rate until the money is finally collected.

Customers of London & Provincial, many under-capitalised, may have to write off at least 20 per cent of their debts as bad. Some say they could go under. London & Provincial did not belong to the 11-strong Association of British Factors and Discounters, whose members are largely owned by the big banks and account for 95 per cent of the pounds 14bn factoring market. Sadly the moral must be to treat the remaining 5 per cent of the industry with circumspection.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in