Business Media Articles (Archived)

CIF research shows the public needs more education in the benefits of factoring

Reprinted from 'Niche' magazine

Close Invoice Finance has recently commissioned some independent research into the factoring industry and the results make interesting reading. We are still analysing the detailed findings but what is becoming apparent is that we in the factoring business need to be doing much more to make small business owners aware of the benefits that factoring and invoice discounting can bring. A communications and education effort is needed which in turn will help us to grow our businesses.

It seems that many business owners still do not realise that factoring and invoice discounting can overcome potentially fatal cash flow problems. Factoring is a lifesaver for individual firms, yet many business people are unaware of its existence or do not understand the major benefits it can bring. But among those who do use factoring services, our research reveals that almost 70% of firms report that they are well satisfied. This shows that on the whole we are doing a good job at servicing those that already understand the benefits of factoring. However, more needs to be done to educate non-users.

At CIF we think there's now a real urgency about highlighting the benefits of factoring. Too many SMEs are suffering because they simply don't realise how they can be helped. Business people often do not realise just how flexible factoring can be and that it enables them to raise more funding than they would be able to through other means, such as an overdraft from a bank.

Our communications efforts will be focused on getting over the message to potential (and sometimes even existing) clients that the great strength of factoring and invoice discounting is that it is very carefully tailored to the financial and other business requirements of a specific client at a specific time in their business cycle.

There is also a job of education and communication to be done in making clear just what good value for money factoring companies are providing their clients. Our research shows that price is overwhelmingly the single most important issue in deciding which factoring or invoice discounting company SME's choose.

The independent research has CIF coming top of the poll in satisfaction ratings among users of factoring companies, with a further 95% of respondents saying they would recommend the company to business colleagues and other contacts. We intend to make sure that this happens. CIF also benchmarked well ahead of its competitors on customer relationship issues.

For existing users of factoring companies, perhaps not totally surprisingly, getting "the best deal" and "value for money" were far and away the most important determinants of which organisation to work with. Customer service came second in importance but a long way behind the issue of cost in responses to the research we commissioned.

I'm delighted that CIF scored so well both in terms of value for money and client satisfaction. It clearly demonstrates that the business strategy we launched last year has been the right one. Now we need to add a coherent education and communications campaign to the mix.

We were also interested to learn from the research that the advice of accountants is the single most important influence in a client's decision on whom to appoint to handle factoring and invoice discounting requirements.
Accountants are there to help their clients make their money work as hard as possible. Couple this with the good value for money we represent and it isn't at all surprising that accountants are recommending us.

And a final footnote: poor scores were achieved in our study by factoring companies who outsource call centre customer service work abroad. At CIF our call centres are all UK based. A high percentage of respondents said the off shore workforces of our competitors often appeared not to fully understand the product. It's clear, therefore, that the cost-savings from this kind of off shoring are simply not worthwhile and indeed risk seriously jeopardising customer relationships.

Over the next few weeks we will be releasing more detailed findings. But in the meantime all of us in the industry should be giving serious thought as to how we raise the profile of our vital service to SME's for the benefit of small business sector, our individual companies and the industry as a whole.



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