ARE YOU PAYING TOO MUCH FOR INVOICE FACTORING?

How to get the best service and most competitive rates

HOW TO GET THE BEST SERVICE AND MOST COMPETITIVE RATESDid you know that many companies are spending too much for their invoice factoring service? And your company could be one of them. Whether you are new to factoring or have used it for a long time, one thing is true: there is a lot to know and many things you may not know. For any small business, having enough cash available to conduct your day-to-day operations can be a real problem. You sell the product or service, pay your staff to do the work, pay your suppliers and landlord and then have to wait for your customers to pay you. So, you decide to factor those receivables to improve your cash flow. But, are you losing out on a few hundred (or thousand) dollars in the process and receiving sub-standard service?

BUYER BEWAREWhile getting the best rate is critical, it is important to look at all aspects of your agreement with your invoice factoring company. Understand all additional fees and contract terms and evaluate money saving options that full-service factoring companies offer. These options may be available at no cost to you, or may come at an additional cost. However, many add–on options provide cost– saving benefits to your business, thus reducing your overall factoring costs. There are many other criteria that should come into play when choosing a factor and signing the agreement, including experience, reliability, reputation, level of service, and how well capitalized they are.

WATCH OUT FOR THE “GOTCHAS”›› Is the factoring company paying you 90 percent of the value of the invoice? Or only 75 percent?

›› Are you receiving your money within 24 hours…or 4-5 days?

›› Will they handle collections with your customer in a professional manner?

FULL DISCLOSURE ON RATES & FEES›› What are their service charges?

›› Are there any hidden, undisclosed fees? Are you sure?

›› What does the fine print say?

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ARE YOU PAYING TOO MUCH FOR INVOICE FACTORING?

ARE YOU PAYING TOO MUCH FOR INVOICE FACTORING?

What does a reputable factoring company do with my receivables? A highly regarded factoring company will take complete responsibility for your accounts receivable. In addition:

›› They conduct the credit management that ensures you are selling to customers that will pay their bills.

›› Once the factor has approved your customer and assigned a credit limit to them, you are free to conduct your business without having the problems of credit management hanging over your head.

›› The factor will even include collection services, which means that you will not have to call your customer with the unpleasant task of demanding their payments.

›› It is a completely professional way to handle relations with your customer.

WHAT ELSE CAN A TOP TIER FACTOR PROVIDE?The best factors in the industry relieve you of many of the problems and activities related to accounts receivable management. In addition:

›› Once you are set up, you will no longer have to conduct investigations and make credit decisions or set credit lines.

›› Each customer will be given a credit line and you will only need to follow the terms of the agreement.

›› They won’t just help factor your receivables; they will also provide great advice on expanding your business, hiring new staff or acquiring a new piece of equipment.

The best factors are true business consultants.

HOW DO I SET UP A FACTORING SERVICE?A well-regarded factor will craft a program that is unique to your business. Typically, you will provide a list of your customers and their open invoices. The factor then sets up a program that provides you with the cash that you need without having to wait for your invoices to be paid. Remember that factoring is frequently available to businesses that may not qualify for unsecured bank lending. It is the creditworthiness of your customers that counts. This gives newer businesses a real shot at getting some of the financing that will make them more successful in a competitive world.

What does it cost you? There are fees that relate to the service, and we will work out a program that fits your business. Remember, however, that you will save money from functions that you no longer have to provide. Those are functions that are sometimes hard to fit into the busy schedule of a small business operator. With a factor, all credit issues are handled professionally.

How do you choose a factor that has your best interests in mind? By following the advice here, comparing various factoring services and reviewing closely the total package you are offered.