Know Your Factoring Company Before You Start

Usually, managers of a good factoring company will be entrepreneurs, like you. In some cases, you can have direct access to the owner of the factoring company, who can make decisions for you at the drop of a hat. But the larger the organization, the less likely it is you will receive the attention you deserve.

This can be particularly problematic for the typical factoring client, who needs something that’s “outside the box.” Too many factoring companies employ inexperienced account representatives with little or no authority to make decisions. What becomes more problematic is when larger organizations bar the client from having direct access to senior factoring company management. It is critical to the success of a factoring relationship that the client have access to senior factoring company executives.

Strong working relationships start with a common philosophy between factoring company management and the client. For example, if strong credit underwriting is the culture of a factoring company but the client places no emphasis on the value of strong underwriting, the difference in philosophy may make for a rocky relationship. Likewise, if the factoring company places a strong emphasis on collections but the client would prefer not to bother his customers with collections calls, that too could pose a problem.

Not all factoring companies think alike. Some emphasize collections. Some focus on credit underwriting. Some utilize technology well. Some provide a wide array of reports to assist clients with their bookkeeping needs. Some specialize by industry, some by the size of a deal. It is important to decide what kind of factoring company fits your business model best.

You also want to ensure that you are not your factoring company’s largest account. If your business represents more than 5% of your factoring company’s volume, the company may not have enough capital to handle your needs or future growth. On the other hand, if your factoring company’s sweet spot is $1 million and you wish to factor only $10,000 per month, you likely will not receive the attention you deserve. Consult with your Interstate Capital account manager to ask if we’re the best fit for you.

Interstate Capital is proud of the fact that we have the size, stability and capital strength to serve clients wishing to factor business of any size. We try to treat every client as if they are our only one, each having full access to Interstate Capital senior-level executive management. Our executive team is hands-on in all aspects of our business.

Author: Tony Furman
Copyright 2009
Interstate Capital Corp.

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