What to Look for When Choosing the Factoring Firm Best for You?

What to Look for When Choosing the Factoring Firm Best for You?

Does your business have a good profit margin and a good credit history? You may be wondering why you're still having a tough time getting a business loan. Banks are getting more and more mysterious and elusive when it comes to approving loans. They seem to take ages to go through your application, and then they reject it citing a reason that you can't really figure out. It's time for you to think whether sticking to the conventional way of borrowing money is the best way or not. If you want your business to be a trailblazer, then taking up financing through factoring may just be right for you. There are some leading accounts receivable factoring companies that could get you instant cash through buying your invoices. While selling your invoices through invoice discounting, you won't take any burden on your shoulder to pay the money back. This is not a loan. The factoring company is less worried about your credit history. They will just check on your customers' credit worthiness and collect the outstanding debt in due time. What about the money that you need so urgently? Don't worry; you can get advance payment of up to 90%, and get down to business right away. What are the things you should look for when choosing a factoring company? Let's have a look at some major points: 1. Know the services the company offers Getting to know the factoring services and their unique selling points will help you to differentiate a particular company from the other. You need to know whether the firm is a broker or a direct funding firm. The latter will process your funding much faster. It is also important to check the distance of the company since it will be easier for you from a logistics point of view. 2. How long has the company been in the factoring business? A company that specializes in accounts receivable financing and has been in the business for a reasonably long time will usually have a good reputation in the market. Also, check whether the company provides factoring services to most of the industries or not. It is indicative of the vastness of their business and clientele. 3. Know how much the company charges? This is an important point since you don't want to pay unnecessary fees while still waiting for the funding. Make sure that the company does not charge any fees or penalties, and only charge a discount fee which is typically between 2.5% to 7%. 4. Get details about the process of collecting money from the customers After buying the invoices from you, a factoring company will contact your customers to validate the invoices. Once the customers confirm the invoices, the company waits for the term period (15, 30, 45 days etc.) to complete. Subsequently, the company collects the money from them. A professional firm handles this in such a way that it won't affect your business relationships with your customers. 5. When you need it, you get it Excellent and personalized customer service is as important in the factoring business as it is in the business world. There could be a more urgent financial need that crops up in the interim from which your factoring firm can pull you out by expediting the process. Make sure you get the helping hand when you need it. It is important to choose the right kind of factoring firm since you want to keep away from financial stress. A reputed firm will take care of your financial woes and you can easily put your business plans back on track.


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