When the clock is ticking and your business finances are at stake, how do you sift through your options to find the best factoring company?
Locating great services for any type of need is challenging, so we often generalize to make things easier: for example, only considering location and cost vs. quality to find a good value. Sometimes this works, and to some extent you may be able to compare factoring companies in the same industry by fees, rates, and contract perks.
Choosing a factor based on value is a disaster for your company when the factor isn’t right for your business needs: you could become trapped in a long term contract when you only wanted to spot factor, for example; or you may depend on a factor for back-office support only to discover that they are money-only.
Comparing Factoring Company Options
When the clock is ticking and your business finances are at stake, how do you sift through your options to find the best factoring company?
One of the best ways is to use a broker such as Factor Finders. Factor Finders has extensive worldwide connections and can quickly find an optimal fit for your company’s funding needs, at no cost to you. Factoring brokers easily sort through the intricacies of factoring for you, including:
Support Service Preferences
Decades ago, factors had a reputation for being the ‘tough guy’ when companies needed extra help getting invoice payments. This often left a trail of damaged client relationships. Modern factoring companies can skillfully obtain receivables from your customers in a timely fashion, while improving or even maintaining good relationships. Factoring companies all offer support services, but each company does that in its own way – whether by offering administrative support, billing and collections help, or accounting advice. If your company is small or new, you may appreciate extensive back-office support and advice. If you have a well-run system in place, you may prefer a factoring company that is less involved.
Niche Factoring
Specific knowledge of the industry is vital, especially with medical, healthcare, transportation, or construction factoring. Working with account managers who understand your industry can expedite the process dramatically and reduce your stress level. You don’t want to run into any avoidable problems; for example a general factor that does not work with transportation companies often might not have invested in carrier insurance, or understand why construction deals need to be processed quickly.
The Internet Factor
So many factors are now online, that this is where most companies begin their search. State or even country borders are no object for many factoring companies. It may not be apparent outright which factors can help you and which are a waste of your time – for example, healthcare and medical factoring often carry a lot of stipulations. You can also trust that a broker would not refer you to an ineffective or fraudulent company.
Your Primary Interests
Besides improving your cash flow, you may enlist the help of a factoring company to improve your credit or to help support you as you expand your business. Communicate these needs to your factoring broker – it will help them better locate a factor who can help you achieve these goals. With factoring, you’re not just purchasing a product or getting a ‘loan’; you will actually establish a type of business partnership with a factoring company – their success is tied in with your success, and they want to see you succeed and grow.
Company Structure
Some factoring companies will assign you a specific account manager. You may appreciate consistency in the services you receive – on the other hand, working with a large company you may find that someone different processes your checks every week, but other perks such as greater availability might outweigh that for you.
Logistics
Using a broker will also help you eliminate the difficulties of sorting through so much information in so little time.
Finally, although you can’t compare factoring companies, there are some general points you should look for in the company of your choosing:
Professionalism: Its reasonable that you won’t want to deal with a factor (or subject your customers to them) if they are not reasonably supportive and courteous.
Years of experience with invoice factoring: Many financial institutions focus on one or two types of financing, but offer factoring on the side as well. Although you may be tempted if the funder has a big name or a positive reputation for other types of lending, it’s best to stick with a company that knows factoring. They can ultimately bring you the best services.
Reputation: Because factoring companies observe strict customer confidentiality, many cannot provide you with specific references. If you can’t find anything online, discuss potential companies with people who are familiar with the factoring industry to gauge a factor’s credibility.
The key to an excellent factoring company is all about fit – what is going to work out best for your company in the long run. When you’re paired with a factoring company equipped to deal with your company’s individual needs, your relationship with the factor becomes not just a means to improve your cash flow: it’s an investment in your company’s future.
About the Contributing Author: Factor Finders, LLC provides ideal invoice factoring solutions that fit individual company funding needs. The company works with corporations all over the globe, offering factoring solutions for start-up companies as well as larger corporations in need of millions.
Factoring results in improved cash flow and credit, and facilitates better business management. Factor Finders offers high advance rates combined with top-notch support services that are unmatched in the industry.
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