Letter: 'Factoring' can aid small businesses

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The Independent Online
Sir: I read with interest the two letters dealing with 'late payments' (14 August). However, neither of them offers a method that enables the usually small supplier to deal with the either incompetent or unscrupulous large customer who delays beyond the agreed terms the settlement of the due sums. The charging of interest will create only ill will and confusion and do very little - if anything at all - to help the supplier's cashflow.

For more than 20 years now, there have been 'factors', usually associated either with one of the High Street banks or with another substantial financial institution. These companies include, as a basic part of their service, the collection of sums due to the supplier and this is particularly helpful in overcoming the 'late payments' problem. The financial section of even the largest customer does not wish to make obvious to another financial heavyweight that they are riding roughshod over the smaller supplier in breaking agreed terms of payment. Apart from anything else, it may affect their credit rating]

For this reason, it is surprising that so few firms seem to use this facility. I was involved in running a small business from the late Sixties until recently and had very little trouble with this problem because my company used a 'factor'.

Yours faithfully,

CHARLES HOFFNER

London, NW3

14 August

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