In these straitened times, with clients often pushing payment to – if not well beyond – the agreed terms, then the cashflow benefit of factoring your debt is obvious.

However, as this week’s lead story on Folio illustrates, it doesn’t come without risk.

I’m sure more will emerge about the reasons behind Folio’s imminent fall into administration and pre-pack sale back to its managing director Andy Bird, but even at this early stage, while clearly not shirking his own responsibility for the firm’s demise, Bird is resolute in his opinion that the firm’s lender RBS should shoulder a substantial portion of the blame.

Based on past conversations, anecdotally at least, it seems that the broad predicament that Folio found itself in would strike a chord with many in the industry.

In the good times, factoring or invoice discounting can provide useful working capital for growth or, more likely, smooth the flow of cash when payment terms are getting stretched to breaking point.

But the danger is that when things get tough, what starts as a helpful sticking plaster for a firm’s everyday cuts and scrapes can all too soon become a crucial crutch for day-to-day survival.

And when that crutch is kicked away, for whatever reason, then the all too predictable consequences are that a business will stagger or fall over completely.

And when so many in the industry are apparently as reliant on factoring as Folio was, you have to wonder if it should come with a serious fiscal health warning.

Darryl Danielli Editor, PrintWeek