When deciding on which factor finance company is best for your business financing, implement this checklist to find out everything you need to know before factoring. It’s recommended that you get a few competitive offers to ensure you find the best factor financier match for your growing business.
CHECKLIST | FACTORING
- Use Factor Bid to compare invoice finance offers.. Free!*
- Use Factor Bid to quickly match your business with factors that specialize in your industry!
- Does the factor have experience in your industry?
- How long is the factoring agreement?
- How fast do you get paid?
- Do you offer non-recourse agreements?
- What is the benefit of a non-recourse agreement?
- How will you communicate with the factor and what type of reports will you receive?
- How often will you and the factor need to meet or talk each week?
- How quickly does the factor collect debts?
- How does their debt collection process compare with your debt collection system?
- What is the factors idea of a ‘quick response’; hour, half-day, day, week?
- How do you get a customers credit limit increased?
- What happens if a customer breaches their credit limit?
- What accountability is in place if the factors performance is unsatisfactory – for example will you be penalized and forced to pay charges for debts the factor fails to collect?
- How will the factor handle debt collection? What is the process and methods used?
- When will statements be sent out?
- What happens if a customer disputes an invoice?
- How will the factor follow up with overdue debts? Daily, weekly, monthly?
- Does the factor send certified letters, make phone calls or send emails when payments are overdue by the debtor?
- What will happen when a customer’s payments are seriously overdue?
- What format will the final reminder take and when will it be sent out to the debtor?
- Does my company always get a copy of all communications, collections and final notices sent out to an overdue customer?
- What further action will the factor use to collect overdue debts?
- Will a collection agency be used to collect overdue debts?
- Will legal action be taken to collect overdue debts?
- What would happen if you wanted to change factors?
- Is there a notice period to stop factoring? If yes, how long (3 months) or longer?
- Is there a fee to stop factoring? If yes, what is that fee?
- What if you want to change the services provided by the factor?
Make sure and read the factoring agreement and ask questions about terms and conditions that you’re not familiar with or do not understand. What will it take to end the factoring agreement is their performance is unsatisfactory?
One thing to consider, if you’re not making money and increasing your business by then either is your factor finance company. Factors want your business to grow. They make more money in getting your fast cash if you’re more busy then when you started. Take advantage of access to immediate cash and use the factors money to grow your business instead of standing by while your customers use your money to grow theirs!
If you have additional questions that should be added to the checklist for factor financing, add them in the comment section for readers to review. Thank you.