When looking at your options when choosing an invoice factoring company, critical questions should be asked.
- Time in business: Small factors come and go. If you pick one that closes down, your UCC filing which shows the world the old, out of business factor has a security interest in your Accounts Receivables will still be in place and it could be difficult to arrange replacement financing. Businesscash.com has been helping companies get funded since 1998 and has a strong track record.
- Understands your industry: If you need government factoring services, you want an invoice factor who understands the FAR and dealing with government entities. We have been funding businesses selling to federal, state and local governments since 1998.
- Fee Structure: Not only is the overall factoring fee important, but how it is triggered matters. let’s say your clients pay on average every 33 days. You wouldn’t want your fee to trigger at 30 days. A fee based on 10-day increments might be best for your unique situation. At businesscash.com we utilize the most sophisticated software systems available with flexibility when it comes to rate and timing.
- Factor Advance Rate: Make sure you are comparing apples to apples when looking at your invoice factoring options. Fees are just one of three critical variables when comparing factors. Of course, your advance rate is based in part of the creditworthiness of your clients and how long they take to pay.
- Reserve Policy: Besides the fee charged per time and the advance rate, when your factoring reserves are released “factors” into your true cost of funds.
- Timeliness: One of the more critical variables to consider is how quickly you can get funded. Both when you get started and your subsequent weekly or daily fundings. Businesscash.com understands that time is money and we have the systems and manpower in place to fund you rapidly.
The Scottish Government(!) has an excellent post on How to choose a factor or invoice discounter. Businesscash.com is US based but it is a good group of questions for the educated entrepreneur.