Choosing the Best Factoring Company
There are numerous factoring companies out there, making your selection process a daunting task. However, it is important that you take this process seriously to ensure that you are making the best decision for your business.
In instances that your company is experiencing financial obstacles, factoring can be a great way to turn your outstanding invoices into cash that you can readily use. Unfortunately, not all factoring companies can be helpful, in fact, if you end up choosing the wrong factoring company, you will end up with headaches instead of solutions. Actually, a headache is quite possibly an understatement because the situation might be even worse than you can ever imagine. To make sure that you do not end up in a very unfortunate situation, take a look at the few tips below which will help you in choosing the best factoring company
Ensure your qualifications as a factoring candidate.
The first thing that you have to do is to make sure that you are a qualified factoring candidate. You must at least have $5,000 worth of monthly invoices for factoring to make financial sense. There are even some factoring companies who set their minimum of monthly invoices to $10,000.
The factoring companies will also take a look at your customers who still owe you money and determine whether it is likely that they will not pay you. Long-term clients with proven track records will most definitely help your grounds.
Conduct your own extensive research into the reliability and stability of factoring companies.
Second, you must conduct your own research online and find at least about four to six factoring companies to look into. It is essential that you set a meeting with them personally so you can find out which offers the best rates, the highest level of professionalism and which one has the most experience.
Find out how the factoring companies on your list do business.
Given that the factoring companies work directly with your clients, you should observe how the agencies conduct business in person. You must take the time to review their letters and maybe even sit in on phone calls so you will have an idea as to how the process of factoring works. It is just as important to find out how the factor handles past-due accounts and when they usually turn to a collection agency.
Find out which factoring companies can best suit your business and its needs.
You must also know that the factoring companies also differ in expertise and size and the best factoring companies should have demonstrated success with other companies such as yours. It would be helpful if you could also ask questions from potential factors. The factoring company that is already accustomed to dealing with clients of your size will most likely offer you service that you feel you deserve.
There are also specialized factoring companies that you must know about, such as medical factoring and construction factoring. There are factoring companies that focus on these two fields, because of the very complex billing process and required legal requirements, so those in health care or construction industry can directly deal with the specialized factoring companies.
Determine which factoring company provides more efficient services.
The most dependable factoring companies have online invoicing systems which allow you to submit new bills for factoring, review customer payments and your total costs. Electronic submission lessens the turnaround time to a minimum of 24 hours. This proves to be very convenient especially if you are in need of quick cash.