4 Points to Consider before Selecting an Account Receivable Factoring Firm
Many business experts like to believe that factoring is one of the easiest ways of getting things rolling up front by easing the burden of cash flow. While that is true to a good extent, working with the wrong factoring firm can altogether add another kind of tension to your business.
In order to choose the right firm for your business, you should be smart enough to make right decisions when it comes to choosing a factoring firm. A lot of things come into play including the kind of business you own. For example, if you have started a trucking company, then trucking factoring is something Pay4Freight can help with as it is one of the leading trucking factoring firms in United States. But, if you go with an agency that doesn’t have a good reputation, then you could be risking a lot.
You should be making similar good choices for your other kinds of businesses as well.
Mentioned below are 4 points that your must keep in mind while selecting a factoring firm for you cash flow needs.
- Business Expertise: You need the right business expertise to choose the right factoring firm as these firms come in various shapes and sizes. It is important that the expert with you clearly understands your business model and the kind of industry you work in. You can consider partnering with one of the good accounts receivable factors who clearly understands all your requirements and is good enough to keep your operations smooth in the future.
- Customer Support: Do your research on time and make sure the factor you are choosing has earned a reputation for its top class customer support. In business world time equals money and you wouldn’t want yourself calling one phone to another and trying very hard to get solutions to your problems. Instead you need something that is quick, precise and effective and only a firm that understands the true importance of customer service can give you such support.
- Cost of Service: Before you start searching for factoring services, it would be a good idea to understand the details of a factoring firm structures its fees. When a business sells of its purchasing orders to a factor, the factoring firm actually buys them at a discounted rate. This can either be in form of a one-time fee or a percentage of the total amount depending on the tenure of the repayment. There are many other ways through which these services offered by factors get affected and there always are corresponding changes in their fee structure. So you should look at what kind of service are you looking forward to and then start comparing prices of different factors.
- Flexibility: You should clearly understand that it is actually the flexibility that you are looking for, in a factoring service, and if you don’t get that then there is no point at all. You should be prepared with your set of questions and shoot them one by one to analyze how flexible the particular factor is.
Ask them if the factor has rules about the tenure of the relationship or any minimum number of months or years you have to sign the dotted lines for. Find out if you need to see your invoices to get their services and learn about the maximum amount that they can fund you with. Only after getting satisfactory answers to these questions and few more you should go ahead and think of finalizing with the factor.
Author Bio– Robert Beard owns a factoring company in United States. He often writes finance and factoring related articles for leading finance journals, and helps the small business owners in maintaining a healthy cash flow.
Category: Business
