Factoring Companies - How to Pick One
So you heard how factoring might be able to help the cash flow of your business.
Factoring usually insn't something they teach in school so my guess is you heard about how factoring companies work either because they are common in your industry or you have a friend who's company uses one.
When people start looking into factoring as an option for their business they usually type " factoring companies " into Google and get a bunch of ads and articles from different factoring firms talking about how they are the cheapest, or the fastest, or the best. The purpose of this article is to give you a few simple questions to ask when you start calling factoring companies.
What is most important is that you ask all the factoring companies the same questions so you can compare, apples to apples.
The following is a simple list of questions that should serve as a good starting point for your investigating which factoring company is right for your firm. After the question I will answer the for our firm. To learn more some of the industry terms below click word.
- What are your typical invoice advance rates? Our firm typically advances between 80% and 90% depending on the composition of the receivables.
- Is it recourse, or non-recourse? All of our facilities are recourse.
- What are the typical contract terms? 60 days
- How long does it take from when I apply until I am approved? If all the information provided to us is accurate we are typically able to give you an answer within 48 hours.
- Is their an application fee? No.
- is their a monthly minimum factoring fee? No.
- Do you have an online invoice creation tool to submit invoices? Yes.
- Does your system integrate with my accounting software? If you use Quickbooks, yes.
- What do you charge for ACHs and wire transfers? We ACH twice a week for free and charge $15 per wire.
- Am I required to factoring all my invoices with your firm. No.
