Accounts Receivable Factoring Companies: Simplifying Your Search

Posted by Bruce Sarver on Thu, Jan 09, 2014

Know What to Look for

Defining the Terms

As you’re searching among numerous accounts receivable factoring companies for just the right one, you’ll undoubtedly come across a litany of similar terms that may be confusing.

When you’re trying to compare apples to apples, keep in mind that accounts receivable factoring may be referred to by a number of other terms or closely related terms. Asset-based lending, AR factoring, and invoice lending are all in the same realm of business lending. Let’s connect the dots. Your accounts receivables, resulting from invoices, are assets—assets that can be purchased and used as collateral for the purpose of securing a lien, thus providing a platform for business lending. PO financing is another term you may come across in your search. You should be aware that this is something distinctly different, although accounts receivable factoring companies often provide it.

Generalist vs. Specialist

Robert A. Heinlein wrote, “A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects.” I love this quote and the rare people who embody its sentiment. Who doesn’t like the romantic notion of a Renaissance man, but I don’t feel the same way about the companies with which I choose to do business. Specialization generally equates to a higher level of knowledge in a specific area, which results in a higher level of quality. I want the person who cuts my meat to be an actual butcher, not a computer programmer, and I hope my football coach neighbor isn’t designing any buildings with more than one floor that I’ll be walking into.

There are thousands of accounts receivable factoring companies for your consideration. On the surface, it may seem like accounts receivable factoring companies can’t be all that different. How do you choose the factoring company with which you want to work? For starters, there are generalists and specialists. While Fast A/R Funding has a name which leaves nothing to question in the way of the types of financing provided, many companies that provide this type of funding may not be as obvious. There are a lot of “jack of all trades” type of lenders out there who dabble in large arrays of financing options and bill themselves as a one stop solution. Typically, those entities will operate under a more general brand name. Fast A/R Funding currently embraces a more focused approach. While we remain flexible and may diversify where strengths permit, we’re very focused on being among the best of accounts receivable factoring companies. We know that we are specialists, and we believe that’s an asset to our clients.

Spotting Quality from a Distance

You may be asking, “What if I’m not ready to speak to anyone yet?” You’re looking for a way to narrow down the list a little more before making direct contact. Among the quality cues which one can spot in a simple website review, first, look for educational information. I’m not just referring to an “about us” tab, which may contain little insight. Accounts receivable factoring companies that are happy to provide educational materials, blogs, and tools to help you understand factoring and weigh your options, are more likely to be honest and provide quality service. The ability and willingness to go to extra lengths to provide such materials may indicate substantial experience and the desire for mutually beneficial relationships. Second, look for innovation. Do they provide online tools to their existing clients that provide 24-hour access to current financial information regarding funds availability? Do they provide the ability to submit new customers and invoices for factoring at any time of day in order to suit your schedule? Once you’re ready to contact a company, a third quality cue is creativity. Are they willing to consider making adjustments in order to say “yes” more than “no?” Fourth, and finally, if you don’t like the customer service you receive initially, it’s unlikely you’ll enjoy the service later.

Consider these concepts and simplify your search. The right factoring company will serve as a fantastic resource to help you reach your business goals.

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Tags: Invoice Financing, Accounts Receivable Factoring Companies, Invoice Factoring