Factoring enables companies to monetize their invoices and obtain funds to achieve growth, invest in new projects, buy supplies in bulk, and more. Several large consumer factoring companies, such as credit card companies like Visa and Mastercard, with commercial clients getting served by specialized factoring companies and banks. Business Factors & Finance provides businesses with both recourse and non recourse factoring to get the necessary funds to run their operations. The non-recourse factor enables it to purchase the invoice from its client and become fully responsible for the invoice collection. On the other hand, the recourse factoring the factor lends the client against a pending invoice which needs to get paid in full within a specified period else the client will get required to replace it with a new one. There are several factors that clients need to consider when choosing a factoring company to ensure that they meet their factoring goals:
Experience in the factoring market and the industry
One of the important factors to consider is the years of experience the non-recourse factoring company has acquired. In addition, the experience should get compared to the businesses handled within the client industry to assure an efficient service when engaged. The years of experience in the specific client industry show that the factoring company fully understands the different ways to handle the factoring process for the client business despite the possible risks. Also, the longer the factoring company has been in operations, the less the chance of experiencing hiccups that affect the client.
Customer service quality
It is very important for the factoring company to fully understand the clients’ needs on why they resorted to the solution when it comes to factoring. The factoring company then works together with the client to ensure that their desired result is fully achieved. In addition, the exceptional customer service enables the non-recourse factoring company to walk the client through the possible avenues to enable them to meet their goals and the whole process. In addition, a clear line of communication to answer customer queries and inform them of the progress made further enhances the customer service experience.
Being trusted with the factoring options of client business, a factoring company needs to offer online account access with a detailed fees breakdown. Different startups have different charges options, with some preferring long-term arrangements with an early termination prepayment penalty. On the other hand, some factoring companies require monthly minimums and charge due diligence, lockbox, startup, and wire fees. In addition, all factoring companies charge a one to five percent invoice monetizing discount rate on a specified time. The company’s openness on the charges and deductions further wins the client’s trust and improves their business relationship.
Types of factoring provided
Depending on the factoring interests of the client, a factoring company needs to have the capacity to provide one that meets the client’s needs. A good example is businesses that require to ensure their invoices against the risk of non-repayment should consider the non-recourse factoring even though it features slightly higher fees due to the associated risks.