For a small to mid-sized business choosing factoring over a standard type of business loan is a very sound financial decision. However, it can be challenging to understand the value and the possible issues in working with different factoring companies.
Finding the best invoice factoring service is important. It will ensure you are being charged the lowest fees for the service while still receiving the best quality service and customer care. It also ensures your customers will have a positive experience in working with the factor, which is another essential consideration for long-term business relationships.
To help you to in sorting through what is important and what you should compare between factoring companies, this short list of areas to research or confirm will be helpful if you are looking for a first factoring company or looking for a better service for the future.
Expertise and Experience in your Industry
One of the most important considerations in choosing the best invoice factoring company to match your needs is their experience in your particular industry. Not all businesses and industries as the same when it comes to factoring and a company with experience will be better prepared to make a fair offer for your business.
Experience in the industry also means the factoring company has experience with many of the major customers your business is working with. They also have a better understanding of fee structures and have a more effective application processing system.
Professional and Corporate Reputation
The factors reputation and commitment to customer service for their existing customers are equally important as experience. Keep in mind that any company can have a bad experience with a factor but the best invoice factoring companies will have overwhelmingly positive feedback and reviews from their customers.
Looking around online and even asking other business owners in your area about recommendations can be a very good first step.
Rates and Terms of Service
Once you have found a professional, experienced factoring company, you will need to compare rates and the actual terms of service. The best invoice factoring companies will act as your back-office and will treat your customers as their own, providing a positive experience for everyone.
Additionally they will have competitive rates for the services, and they will not charge hidden fees or fees for everything they do. Look for companies providing no-fee applications, no fees for termination, and no need for long term contracts or specific volumes of accounts receivables paired with competitive rates.