Birmingham, Alabama – While every invoice factoring company offers a largely similar service to any other invoice factoring company, not every factoring company is the same. On the contrary, there are significant contrasts between organizations that can influence your business in significant manners.
Factoring is a type of financing where a business offers its invoices to an outsider financial organization or factor. A factor progresses funds on a percentage of the invoices offered and provides the cash legitimately into your account.
So, before you decide to choose a right factoring company for your business, here is a rundown of significant things that you ought to consider
Research for the company’s experience and reputation
Going for a Factoring Company can be a quick answer to your cash flow needs. While looking for a factoring company, attempt to select one that has a decent experience and has been doing business for a longer timespan. Though the invoice factoring procedures are standards still a company that offers different services and has better experiences and references is worth to be considered to meet your financial needs.
Check if the company offers Recourse or Non-Recourse Factoring?
There are two types of factoring- Recourse & Non- Recourse.Recourse financing requires the entrepreneur to guarantee and expect the risk if their client is unable to pay the factored invoice. In non-recourse funding, the factor accepts all risk of delinquency of a factored invoice, and the entrepreneur assumes no risk. However, given the higher risk, less than 20% of factors offer non-recourse funding with a higher fee structure.
Check the Terms and Rates/Fee Structure
Not all factoring companies offer similar terms, rates, and fee structure. Some factoring companies have caps on how much they can finance at max. Your business may not ever need to get more than any of these caps, however, if you do, capped funding can deny you of the capital you need. Thus, we suggest finding a considering accomplice that doesn’t cap their funding. Additionally, be sure to read the contract they provide and take note of the penalties and the conditions in which the penalty could be applicable. Consult these points with a financial advisor, if needed before you decide.
Also, a company that claims to offer the easiest, fastest, and cheapest funding may end up charging more through many hidden charges. So what may appear to be the least expensive or most ideal alternative can end up being the more costly or more prohibitive choice with extra charges or lower advance rates. On the other hand, an expensive service may lead you overpaying, so match the rates with the services that are being offered by a factoring company.
It is always a good option to choose a factoring company that offers flexibility like which invoice you want to factor. Never go for the options to factor all invoices or factor the invoices from a particular customer.
Quality of Services
When choosing a factoring company, it is always important to look for the quality of the services it provides. Unlike conventional bank credits, invoice factoring is not difficult to qualify for, and approval is generally faster. That makes it an ideal alternative for businesses that require immediate cash. So it is apparent to check how long it takes to receive funding ideally within 24 hours after approval. Ensure what services are being offered along with the amount of capital you need to keep your business going.
Remember, while choosing a factoring company, a little research can go a long way toward ensuring your factoring arrangement best serves both your business and customers.
Company Name: Porter Capital Corporation
Contact Person: Marc Porter
Email: Send Email
Country: United States