Factoring Companies USA - Some of the secrets part 8. What not to do.  

As part of our Secrets series I wanted to write a couple of blog posts of what clients of factoring companies shouldn't do.  The first article will focus on the most important thing.  I think all factoring companies USA would agree that the most important thing not to do as a client of a factoring firm is to lie to your factor.  This may seem like something really obvious, and I don't want the tone of this article to be condescending or preachy but sometimes lying can start as something small like a lie of omission and develop into something much larger.  I wonder if we should put a definition of what a lie is in our comprehensive factoring glossary?

In our day to day business lives we all choose what we will share with the people we interact with.  Our ego's make it difficult to tell people things that makes us look like we made a mistake, or are just plain negative.  We all make mistakes. I have financed hundreds of companies and I have been in situations where things have spiralled out of control becuase people were unable to simply admit that that they made a mistake.   

The difference between lying to one of your other business associates and lying to your factor is that factoring companies control the bulk of your cash flow and have your personal guaranty.  If they feel like they can't trust their client, they may choose to stop advancing and could put you out of business which may result in an exposure under your personal guaranty. 

Take it from the perspective of a person who has been in the commercial lending and factoring business his entire career, I may not like to hear bad news but I can work with it.  I can't think of a situation that was made better for either my company or my factoring client by lying.  The chances are your finance company can work with the bad news if they can still trust you.

The most important thing we have as business people is our reputation and it can been tarnished quickly.  Always error on the side of sharing too much with your factoring company.

To learn more about our online invoice financing product for small business click the link below or look at our FAQ.