Invoice Factoring Companies: Not all the Same

Posted by Jeremy Waller on Thu, Jul 11, 2013


The factoring companies need to knows

Invoice Factoring Companies: Not all the Same

If you’re looking for a factoring company, it’s not hard to find one. Invoice factoring companies are practically a dime a dozen. Factors range from small local companies to massive multinational banks and anywhere in between. All provide the same general service; however, not all provide the same level of service.

What Makes Invoice Factoring Companies Superstars


In today’s fast-paced world, your business’ ability to react quickly is key. The cliché saying that the early bird gets the worm is often true. You need to be able to seize an opportunity as soon as it arises. Factoring provides the funding that allows you to do this, but you need a factor that works quickly.

When talking to a prospective factor, make sure you understand how their process works. You need to understand the time it takes to get the initial funding and how timing works going forward. Some invoice factoring companies take weeks to complete their underwriting and get you funded whereas some will be able to do it in a matter of days. That time difference has a huge impact on your business.


You want a factor that is not only competent, but is courteous and professional. Any invoice factoring companies that you work with will be in contact with your customers. The factor will need to send out a notice of assignment, they will be sending invoice copies and will call to perform verifications and follow-up on past due invoices.

You don’t want a company that is rude, unprofessional or pushy contacting your customers. You need to interview potential factors. Ask several questions up front and listen closely to how they answer. By listening to the words and phrases they use to explain the process, you can get a good picture of how they will treat you and your customers.


Speed and professionalism are two great qualities to find in a factor; however, one thing that truly sets invoice factoring companies apart is their ability to be flexible. You need a factoring company that is willing to work with you.

In a perfect world, there would never be any problems within your company or your customer base; however, that it often not the case. Even the best of businesses run in to issues from time to time. When problems arise, a good factoring company will work with you, not against you.

When interviewing potential factors, don’t be afraid to raise hypothetical questions. Make every effort to understand how they will react when an invoice begins to age out or when an invoice is disputed or when you have an unexpected need for funding.


Transparency is a huge issue. Some invoice factoring companies are as opaque as a rock. You don’t want to work with a finance company that isn’t open and up front with you. There are two key areas wherein transparency is paramount.

The first area you will deal with early on when you’re discussing the company’s pricing and processes. It’s not unusual for a factoring company to quote you a low rate, but neglect to tell you about all of the fees that are tacked on to that. Be wary when you’re offered an exceptionally low rate. After all fees are accounted for, the rate may very well double or triple. If it sounds too good to be true, it probably is.

The other area of importance is in how they deal with problems when they arise. To be honest, this is difficult to judge up front; however, you should still do your best to gage this when interviewing potential invoice factoring companies. This area goes hand-in-hand with flexibility above. You need a factoring company that proactively communicates its position on whatever problem your business is facing.

The last thing you want is an unexpected notice that funding has been placed on hold or that your agreement has been terminated. A good factoring company will keep lines of communication open throughout the entire process. There shouldn’t be any surprises.

Doing Your Due Diligence

Partnering with a finance company is a serious commitment. It’s not one that should be taken lightly. Don’t immediately sign with the first one that comes along. Finding a factor should be like hiring an employee.

Be sure you talk with several invoice factoring companies. Don’t be afraid to ask a lot of questions. You need to really understand who it is you’re working with. Take your time and find the right factor for your business. Find a factor that is quick, professional, flexible and transparent. 

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