So you're heard about factoring services, but for the most part, you've really only focused on the "factoring" part.  You've gone down your checklist as you've conducted your research and due diligence to learn about invoice factoring, or as it is otherwise commonly called, accounts receivable finance.  Your initial checklist may have included items such as:

1. Advance rate
2. Eligible collateral
3. Pricing
4. Factoring agreement
5. Amount of time before initial funding

All of these items are indeed important to the transaction you ultimately enter into with a factoring company, and ultimately a factoring relationship will help to smooth out your cash flow month to month.  However, there are some other significant benefits to the "service" part of the term factoring services.  These items include:

1. Ability for you to check the credit worthiness of your customers
2. Removal of the administrative burden (and cost) of mailing invoices to your customers
3. More robust financial statement

First, a company providing factoring services is very focused on the credit worthiness of your customers because that is the primary repayment source of any invoices you factor.  Therefore, many factoring companies have excellent access to various business credit reporting agencies.  Since factors are checking customer credit very often, they buy access to these databases at reduced rates and often can pass that savings along to you.  Also, factors work with other factors and can check on mutual customers in the spirit of being good corporate citizens.

Next, many companies providing factoring services take over the burden of mailing the physical invoices and back up documentation to your customers.  At Fast A/R Funding, we use an electronic uploading and invoice creation tool so that it is super easy.  At that point, you're done, and Fast A/R Funding's back office prints out and mails the invoices to your customers...at no extra cost to you.  Depending on your volume, the postage savings can be something...in times like these, it's has more impact on your company's bottom line than any interest rate you'll earn at your local bank for your business checking account!  Every bit helps!

Finally, when you use a factoring service, it is different that borrowing money from a bank.  When you borrow money, you have "debt".  When you present your financial statements (Profit & Loss, Balance Sheet, & Cash Flow), you don't have a line item of "debt" on your Balance Sheet.  This often makes outsiders more comfortable with your businesses financial health.

So, as you can see, it is worth the time to pay attention to the other "services" associated with a factoring relationship.  The three examples above are definite value-added services that you can access through an on-going relationship with a factoring company.

If you want to find more information about invoice factoring, please download our Factoring 101 Guide by clicking on the button below, check out our FAQ, or give us a call anytime at 888-833-2286.