When companies factor their invoices, owners can quickly access the cash they need to grow the business. However, with all the companies offering accounts receivable credit lines and invoice factoring, it can be difficult to choose the right financing partner. Below are four tips to help in the selection process.
What’s the Invoice Factoring Partner’s Reputation?
In the process of invoice funding, the factoring company will have to follow up with customers to check the payment status. When working with a factor, it’s important to learn how the process works. If unclear, the company owner should ask for references from existing customers.
How is the Company’s Customer Service?
Every company promises great customer service, but not all live up to their claims. If a company works with an invoice factor, the owner should be satisfied with the factor’s customer service. A factor’s responsiveness to customers’ needs is important no matter how many times a customer has been funded.
Are the Fees Easily Understandable?
Fees can vary depending on the client or the factor itself. They typically include basic charges, but a factor’s fee schedule may also include interest charges and funding costs. Factoring fees may also include minimum volumes, float days, facility fees and more. During the comparison phase, clients should look at the combined fees, not just the factoring discount.
For instance, a customer wouldn’t want to sign on with a factor in hopes of receiving a significant discount, only to find that there are high fees for non-factored invoices. These fees can significantly increase the overall cost of financing, and it’s important for company owners to understand how they affect a business.
How Flexible is the Factoring Partner?
Knowing that a company may face growth opportunities and funding challenges, the owner should choose a factoring partner who can help them through these times. Can a factor make loans or advances for payroll needs, long weekends and seasonal shifts? When company owners find flexible factors, they can grow their businesses in the long term. An invoice factoring company is a great source of small business tips and other help for owners looking to grow their companies. Visit today or call for more information.