[hso]

Hi all,

I've been asked to quote for a contract with 12 staff working daily Monday to Friday, 2 hrs per shift.

What margin would you put after all costs ie holiday. Products, equipment, ppe ?

They have also asked for feminine hygiene quotes, window cleaning and consumables which I will use my own contractors.... Again what margin on this ??

On smaller jobs I do a 25% margin but I guess this would out price me on a larger job?

I'm also looking at invoice factoring.... Any thoughts / cost advice greatly appreciated

Many thanks

[garyj]

You'll get some help if you fill in your profile. It's just the way things work around here.

[garyj]

Think long and hard before going the factoring route, I went with Close (Metropolitan) and found them really difficult to deal with. If you have an overdraft at your bank you will lose that too! They won't let you factor AND have an overdraft.

Seems margins are smaller now, someone on here once wrote "turnover is vanity, profit is sanity", no matter how good the extra money looks on paper if its not making you enough money then don't do it.

I don't think 25% is an unreasonable margin but you'll probably be going up against some National companies and big players who just want the turnover and some of those have margins you wouldn't believe ( I saw one once at 5%   ).    

[Gilbert Sprous]

I looked at factoring once, and only once.  It has to be the most expensive way to finance business there is.  Although they advertise at 4% it is really close to 20-40% when you do the math the way I see it.  When I asked one of the reps about this they really got quiet and would not deny that I was right.  I will give you a quick example using 100,000 annual turn over for simplicity.

A factoring company will charge you by the annual turnover for your business and they claim 4% which is true if it was the annual turnover that you borrow from them.  So if you had 100,000 4% would be 4000 for the year or 333 per month.  But the true amount that you borrow is quite a bit less.  The factoring company will factor month by month so your turnover is 8333 per month, and they will factor for up to 60 days and if your client does not pay within the 60 days then the factoring company will take that amount off the next payment until it is paid but you still pay the same interest.  All of this is usually in their contract with you.  So it would seem to me that the maximum you would ever have "borrowed" through factoring is two months turnover at any one time or 16,666 but that would only be if all of your clients were late, if all clients were on time then the max would be 8333 so the true cost of factoring becomes 4% per month for the most likely scenario of clients paying on time or 2% per month for everyone being late.  So the numbers are per month the APR is 12 times that or 24% to 48%. 

Needless to say, no factoring company will ever get my money.  Use the example above and ask your potential factoring company if they think this is right.

As far as margins go, how much are you willing to take for your contribution to this.  Is there a Manager on site that you are paying or will you have to be there a lot to manage the people.  If I have a site that big and my contribution is pay roll, invoicing, And 1 site visit per week or fortnight to audit then I am willing to go to 15% or if the site is big enough 10%.  I recently quoted for Thorton's in Derby (I did not win the quote) but I used 12% because of the amount of hours that were there and the system I would have used would have managers on the site.  But I am sure I was underbid on that one by a National.

Hope it helps

Gilbert

[trees]

We use a factoring company as the majority of clients we have got are commercial.
To give you a rough idea we pay on average around £300-£500 per month on a yearly turnover of £100k. The company we use are called Bibby Factors and to be honest for the amount we pay its well worth it they are very helpful and we dont have any cash flow issues. We can withdraw 70% of the total amount of invoice within 24hrs and then the other 30% is paid when the invoice is settled by the client. They do all the chasing and they will factor an invoice for up to 90 days so we have a policy that if a customer hasnt paid by 60 days we issue them with a 7 days to pay which we always  find that prompts the client to pay. Also when we get large or one off contracts they are more than happy to help finance it. I find it takes all the hassle of chasing people for payment and leaves me to get on with the work. 

[garyj]

Who sends the 7 days to pay letter?

[trees]

I get the factoring company to send it

[starplus]

that sounds good!!!