Why Choose Us for Your Invoice Factoring Company

Finding the Right Factoring Company

There are literally thousands of factoring companies to choose from, and sifting through all of them to find the best fit can be cumbersome and time-consuming. However, it doesn’t have to be that way. Factor Finders identified six attributes to help business owners distinguish the creditable factors from non-creditable ones. These include a(n):

• Excellent credit department
• Reliable collection staff
• Established history of success
• Industry or niche-product specialization
• Solid financial structure
• Cutting-edge technology system to inform customers. 

Entrepreneurs should select their factoring institution based on creating a beneficial business relationship. The factoring company with the lowest fees or discounts may be the best fit for your business, but companies with slightly higher fees may service your needs better. Other commodities besides discount fees will shape your factoring relationship. The six most important variables are outlined below.

Credit Department

Select your factoring institution with an established credit department. This is especially important if your objective in factoring is establishing appropriate limit on credit for your customers. A company lacking an established credit department with a working, full staff may expose your company to unnecessary risk by offering too much credit. You will also want to avoid factors that offer too little credit because it will be counterproductive in fostering your company’s growth.

Collection Department

Some factoring companies staff collection departments and assign your company an account representative along with a collection specialist. There are pros and cons to both. Your corporation will certainly benefit by having a specialist focusing solely on collecting receivables. On the other hand, you may prefer to have the same person managing your account also following up on past-due invoices, as it allows your account rep to see the big picture when approving new credit lines.

Proven History of Success

Your factoring company should be able to prove financial stability throughout both economic growth and hardship. Conduct research by asking for:

• References from their banking institution(s)
• A summary of their current financial state
• Client references within your industry.

In general, a factoring company with 10 years of financing experience will provide respectable services.

Special Knowledge of your Industry

A firm that specializes in factoring receivables for your industry ranks high on your list of selection criteria. Specialties yield connections and individualized experience with brokers. This will save your organization from paying credit report fees.

Owners of staffing firms should select a factoring staffing agency or a “full service factoring company” that can provide all services it may need including payroll checks, deposits, reporting and software, as well as invoicing and mailing.

These services are often bundled into one fee. Occasionally, full service companies still outsource functions to other partners with more expertise but a third-party arrangement should be disclosed in your contract.

Size of Factoring Company

Small, medium, and large factoring companies will service your needs differently. Small companies specialize in providing customized service and communication with top management, while larger companies offer financial stability that can outlast downturns in the economy. Strive for a mid-sized company that offers qualities of both large and small factors.

Access to top management personnel means the factor will truly work on your company’s behalf. Many small firms offer this service while larger companies will likely send only lower-ranking personnel. However, small companies may also lack the financial resources to purchase your receivables in their entirety.

Technological Advances

Most clients prefer access to their factoring data via high-tech reporting systems. Some factors offer credit decisions online as well. Avoid factors that do not incorporate updated technology into their business as it will cost you additional fees. We live in a digital world, and factors should be able to work with you to get copies of your invoices by e-mail. It’s also of benefit is they can handle customers’ EDI system.

Ask a lot of questions and consider a factoring company’s complete offering of services before making a final selection.