- Don’t automatically accept the first rate a factor offers: negotiate. See if they can save you money with a lower discount rate or reductions of other fees. If not, see if they can offer you a larger advance so you can put more money to work for you.
- Although price can greatly influence your decision, be careful not to put too much emphasis on price over skill and service. The money you save may not be worth it in the long run if you face long payment periods or unreliable customer service.
- You don’t have to transfer all of your invoices over to the factor, so pick and choose which invoices you want funded. If you have a large invoice from a customer you know will remit payment right away, collect the funds yourself and skip the factor’s fees.
- Even though factoring companies notify your clients that payment should go to them, you may want to let your customers know ahead of time. Hearing directly from you will help avoid raising skepticism or concerns.
- See if the factor belongs to an International organization like the International Factoring Association (IFA). Non-profit groups like the IFA assist professionals in the industry by sharing information, training, and resources to better serve their customers.
You may want to read the following sub-topics too:
A basic explaination about receivable factoring.
Types of factoring available in the market place.
Learn what advantages and disadvantages of factoring are.
A basic explaination about common fees of factoring, how it is structured, explained with case example for easier understanding.
Basic knowledge about funding process of a factoring.
A considerable guidance on how to choose a right factoring company to meet your need.
Jargons commonly used in factoring world.