Important questions to ask a factoring company.
Not all factoring companies are the same, with one offering and one price. Some factoring companies specialize in niche industries, while others are generalists. Some may offer low factoring rates, but provide little or no client services. It’s worth doing your homework before signing up, to ensure that you know what you’ll get from the partnership and how you’ll interact with the company.
Here are six questions you can ask your potential factoring company:
- What are the fees?
Will you be paying a flat factoring rate only or are there other costs involved, like money transfer costs and collection fees?
- What is the length of my contract?
A longer term contract may be more beneficial if the factoring company can offer you more flexible rates or other benefits. Most factoring companies offer a 12-month contract, but some might be willing to negotiate with you for a shorter contract.
- What other services can you offer me?
Some factoring companies will provide a full suite of time-saving and convenient services to handle the administrative work associated with your financing. This could include preparing, sending, storing and collecting on your invoices and conducting credit checks on new customers. These value-added services can be the support you need to grow your company successfully.
- How long have you been in business?
A well-established factoring company will have years of experience with a wide variety of clients and will have stood the test of time in different business climates. Unethical or poorly funded factoring companies do not stay in business. This is a time when you want to look for longevity and a long track record of success.
- Do you understand my industry?
Whatever your industry, it’s worth going with a factoring company with professionals who have an in-depth understanding of how your business works. Look for a company with experienced people who know your industry’s business model and challenges.
- Can you offer me flexibility in the number of invoices I will factor?
You may not wish to factor all your invoices. You may have different quick pay agreements with some of your customers. Discuss your needs and see if the company will be able to accommodate your requests.
Pose these questions and more to Interstate Capital
The friendly and experienced factoring professionals at Interstate Capital are ready to answer all of these questions and more. These experts can tell you in detail how the process works, from applying for factoring to receiving your first funding. Since 1993, Interstate Capital has helped business owners succeed and is now one of the largest factoring company in North America. For more information about factoring choices, get an instant factoring rate quote today.