FOR Brigitte Tee-Hillman, almost a lifetime’s interest in mushrooms started when she was three years old, under the tutelage of her grandmother. It became a much-loved hobby and then, realising the dream of perhaps every entrepreneur, a successful business.
With the help of her husband, John, Mrs Tee-Hillman set up Mrs Tee’s Wild Mushrooms in 1992, supplying some of the country’s top restaurants with 20 different types of fungi.
The company, which turned over £380,000 last year, sells about 150 kilograms of mushrooms every day to restaurants including Le Gavroche, the Dorchester and Claridges. Many of the mushrooms sold are imported and, until recently Mrs Tee-Hillman also sold mushrooms that she had picked herself in the New Forest, close to her home in Pennington, Hampshire (she was stopped by the Forestry Commission, but has launched a legal challenged. A ruling is expected shortly).
Despite the court case, the appetite for ceps, girolles, morels and other wild mushrooms among restauranteurs is as large as ever. Where the firm has encountered difficulties, however, is in persuading clients to pay on time.
“Very good customers can be very bad payers. One of our best and most -valued clients regularly did not pay for three months. This had a negative effect on our cashflow,” Mrs Tee-Hillman says. To counter these difficulties, the firm engaged Venture Finance, a factoring company.
Factoring is a form of invoice financing that helps to boost the working capital of firms by advancing money on unpaid invoices. A factor pays up to 90 per cent of the value of an invoice as soon as it is issued, passing on the remainder of the sum when the customer pays — minus an administration fee and interest charges.
The factoring company not only pays money upfront but also takes control of the sales ledger and encourages late payers to pay on time. Peter Ewen, of Venture Finance, says: “Firms which use the services of a factoring company don’t need a credit controller. The factor will do it all for them.” Factors can also honour payments where the client goes bust.
Late payments always pose difficulties for growing businesses, but new research shows that the problem is getting worse. A survey of 3,000 European small-to-medium-sized enterprises by Eurofactor, a factoring firm, shows that last year companies in the UK waited an average 51 days for payment, up from 45 days in 2004.
Mr Ewen says that before a firm appoints a factor, it should examine its options. “Go and see how they do business,” he says. “Most factors will try to do what the client wants. We will always be professional, but if a client wants a tougher approach to slow payers, we can do that, too.”
Invoice discounting is an alternative for firms who do not want to hand over responsibility for their sales ledger. Factors who provide this confidential service do not have any dealings with customers.
The benefits of steady cashflow come at a price, however. Factoring firms charge an administration fee of between 0.5 per cent and 2.5 per cent for each transaction, as well as an annual interest charge of between 1.5 per cent and 2.5 per cent above the base rate charged daily until payment.
IN BRIEF
