LLoyds TSB commercial Finance is a factoring company to aid business cashflow. They used to be known as Alex Lawrie.

Has anyone had experiences of claiming against a banks factoring company as we are now in the process of going to court because they are suing us for a £30,000 guarantee/idemnity - even though our company went into liquidation over a year ago and the debts are owed by our ex-customers. But the factoring company have chosen NOT to chase the money in from the customers and have instead decided to claim from us after unfairly waiting 13 months to do so!

Because we were mislead and they broke terms and conditions we are counter claiming against them, after speaking to a solictor.

This is all very stressful and we are not sure we will win.

Has anyone had experience of this before? Can anyone help?

Hiya,

Something of a different subject this is, no doubt a few are looking for answers.

Ok, you had a factoring agreement and presumably, from what you have posted, you signed a personal indemnity/guarantee.

Under that indemnity, they are now claiming against you for £30K that they have not recovered.

Am I correct so far?

If so..

Next you say, you were misled and that they broke the T&C's, so you have counterclaimed, would you like to expand upon this at all?

Under the t&c's of a factoring agreement the money is loaned against the invoice debt ( normally 80% debt value ). Depending on what type of factoring you have chosen either you or the company chase payment and then the remainder of the money becomes available ( 20% )when that is cleared. If the company that owes the money disputes the amount, the factoring company take it back, if the debt goes beyond an agreed period ( 90 days is usual ), they take it back and if the company refuse to pay for any reason, then the factoring company take it back.

Sorry to say, but it doesn't look like you have much hope. Why wasn't the money forthcoming from the debtor? Wouldn't you be better off chasing them if they owe the money?

I also don't think you would have much luck claiming the charge for the bacs payments if you went for the same day option as they can prove that manual intervention was used, which is a shame because factoring cost me thousands.

Hi and thanks for your replies. I am not used to this forum so I presume I am replying to both of you?!

Reply to gary67 and aqua2

Ok, this is quite complex but I will try to explain -

Yes Lloyds Commercial Finance meant we were paid 85% of the invoice up front and if after 120 days the customer had not paid the bill then the money was taken back. We are NOT claiming for any 'bank charges' as such and we opted for Bacs or Chaps payments.

We also cannot chase the customers direct as unfortunately our LTD printing business went into liquidation in Jan 2006 so we are not permitted to have any contact. Once the customers got wind of our liquidation they then started to plead that jobs were delivered sub-standard or not delivered at all - which is not true and we have proof of this!

Problem is that after 14 months of the factoring company saying they will get the money in (which only 85% is theirs, the rest ours) they have not chased sufficiently and have instead come after us for the money after all this time as we signed a guarantee! But how can this be fair after all this time. If we now buy the debt back from the bank we have little chance of recovering the debts from the customers after all this time.

I would not reccomend factoring for ANY business as it does cost you lots of money and I really just wanted to find out about anyone else's experiences. I think the banks try to sell this product mainly to printers, couriers and recruitment companies to ease cashflow and to avoid an overdraft facility. By the sound of it gary67 you lost money too - which factoring company was it through if you don't mind me asking?

Here are a few other things we believe they did wrong:-

1. They did not explain to us that we were signing a 'guarantee' and we were not advised to seek legal advice, which is normal practice when signing such documentation.

2. We did not want the service but our Lloyds bank manager refused us an overdraft and advised against a bank loan and we felt 'pushed' into factoring as our only option. The bank manager obviously gained commission.

3. We were told by the 'sales rep' that ALL invoices would be paid at 85% - but this was not true because we only had half dozen customers spending between £10-£30k per month and as soon as we signed up the factoring company capped them all at £5k! So the factoring served us no purpose and we soon needed an overdraft but were refused by the bank because they do not give out this service when you are already factoring.

So we cancelled the factoring and were told it would take 3 months. In this time they raised the capping amount so we stayed with them.

4. The factoring company were funding one customer who they mistakenly took to be a Ltd company with a winding up order and overnight they withdrew £30k of our funding. They were wrong as the customer we used was a 'partnership' - yet we were not refunded our money and lost the customer becasue of this. Ad you can imagine it put a massive dent in our cashflow.

After 120 days the factoring company should recall the money not paid by the customers - yet this was not done. They surely cannot get away with holding onto the debt for over 14 months and then chase us - we must have some rights. And remember this is NOT our debt - all the customers received good quality printing goods and because they have not paid for the work - we are being made to suffer. If we loose the court case we will loose our family home!

Expected this one to be complex, so first thing is try and simplify your arguments...

We also cannot chase the customers direct as unfortunately our LTD printing business went into liquidation in Jan 2006 so we are not permitted to have any contact.

Ok, effectively any money owed the company has to go to the liquidators, but who is the money owed to, presumably the factoring company have paid the company, so the debt is owed to them. This suggests that if you buy the debt from the factoring co, you can then chase that debt.

...delivered sub-standard or not delivered at all - which is not true and we have proof of this!

Can you definitely prove that the jobs were supplied in accordance with the sales orders, including documents etc.

...they have not chased sufficiently

Can you show this to be the case, i.e. by picking certain jobs that you have all the documents and evidence of, that should have been paid, but where the factors have not recovered the amounts.

...as we signed a guarantee!

So it was a personal guarantee and therefore they are asking you personally for any shortfall.

They did not explain to us that we were signing a 'guarantee'

Unfortunately, I dont know if they legally have to explain this, or whether the document you sign is sufficient.

However, as the guarantee part of the document is with an individual, I wonder if it classes as a consumer contract? If it does, it may be worthwhile looking at the Unfair Terms in Consumer Contracts

...felt 'pushed' into factoring

I can fully understand that, but as this was a commercial agreement, there is little protection for you.

We were told by the 'sales rep'...

Do you have any evidence to show that the sales rep misrepresented, the service they were going to provide?

...funding one customer who they mistakenly took to be a Ltd company

Is there evidence to show that it was their mistake and did they fail to recover sums due from that customer?

It seems obvious from what you have written that you have been treated unfairly, but regrettably that can be the business world for you.

Essentially, what I am trying to do above, is get you to move your focus away from the feelings of upset and more towards finding specific legal arguments, that you can physically prove in front of a judge if needs be.

At the moment, things seem to hang on a possible misrepresentation, their failure to provide the service agreed, and/or their negligence in carrying out their duties.

Yes, bad memories of factoring. I had a rapidly expanding company and was owed many thousands in unpaid invoices. Most of the companies were known to my local bank and all paid on time, but Lloyds refused to increase the overdraft, even for just 6 weeks and went to work talking us into factoring. I can only guess the commission would be huge as three Lloyds representatives turned up for the meeting. Alex Lawrie was very expensive and we looked into other factoring companies and came up with Close Invoice Finance, which was still expensive but cheaper than Lloyds by around 1% a month. As you can imagine Lloyds were not happy we decided on using someone else and made life even more difficult. To give you an idea I phoned lloyds many times during the 3 years we factored to say XX thousand pounds is being sent by CHAPS today so you will get the money at 3 o'clock this afternoon so don't bounce any cheques or D/D's, only to be told they had no prove that the money was coming so tough and bounced away to there hearts content, racking up the charges. I was told on many occasions that if we changed to AL then they would be able to help us more as they would be able to see what was due in.

It cost us nearly 10k to get out of factoring, and god knows how much in charges over the years, shame it isn't claimable, especially as CHAPS payments were £25-30 a time.

We went for the "chase the money ourselves" option because we learnt very early on the factoring companies have no interest in getting the money in as all the time the debt is owed you are paying them interest.

Sorry I have gone off topic, its the first time I have seen factoring mentioned on here and given me a chance to rant, in short I would never recommend it, I never expected the overdraft to be taken away because we were factoring, and at times 80% of invoice just wasn't enough, you were lucky to get 85%.

Back to your original question though, it does seem odd that AL are now chasing you for the unpaid monies, I can only imagine with what you were going through that you presumed AL had been paid and the whole matter was settled. It seems unfair that they have waited this long, and by now the debtors have thanked there lucky stars for the 'free' work that was done for them.

Who should have been responsible for getting the invoices paid, you or AL? Even if it was AL they would have washed there hands of it once the money had been taken back ( from other invoiced work, in my experience ) and left you truly scuppered.

Once in this situation there really is no way out as the bank won't help because you are factoring therefore they say you do not need an overdraft or loan, I read somewhere that a high proportion of companies that factor go bust within 3 years. We didn't go bust, but sold the house and paid off most of the debts and literally started again. Most of our problems really kicked in when we started factoring, it just never worked the way it was supposed to, cost a lot more than we imagined and were left stumped when out of the blue they withdrew certain customers and 'capped' others. To be honest, I never actually got my head around what the hell was going on. Sometimes when I was expecting thousands there was nothing, other times money appeared on one customer because someone else had paid bring us back under the funding limit. An awful, expensive & frustrating time.

In hindsight we should never have factored, we were pressured into it by Lloyds when a simple loan or overdraft would have been sufficient. The cycle seems to be- overdraft, loan to pay off overdraft, overdraft, bigger loan to pay off existing loan and overdraft and then factoring.

I would suggest that factoring bears no risk to the banks whatsoever because if one company goes into default they simply take the owed money from your latest batch of invoices.

I can't help thinking either AL or the liquidators should have chased this money a long time ago, it seems most unjust to me that they should bring this all up again.

So sorry at your predicament, just hope someone on here can think of a solution for you.

Many, many thanks for your replies.

We are determined to go to court with all the evidence we have and just basically cross our fingers that things go our way - or at least get treated fairly.

We will let you know of the outcome!

Very sorry to hear what you are going through. Unfortunately I am not at all surprised. Factoring is very very seldom any good for anybody apart from the banks. You are right in your analysis of overdraft, loan, factoring etc. You are also right on the commision concerns that you have. When I had a working relationship with LTSB Commercial Finance I was offered by my then account manager a commision of £1,000 for any lead that I may give him that eventually signed up for their 'service' - regardless of their turnover on the new account.

These companies are feeding on the small businesses and entrepeneurial spirit that this country thrives on and in hand with their high street banking brothers systematically ruining it.

Good luck with your claim - please keep us posted here.

im having issues as well with them