Important Tips for Buyers

Here are a few last tips to think about to help you save money and have an overall better, and not to mentioned informed, experience when choosing a factoring company for your business funding.

Get quotes from several different factors and negotiate Accounts receivable financing is just like any other large transaction and there is usually a measureable amount of room to negotiate toward a better deal. Take the time to gather a factoring quote from different companies; usually three to five different vendors is a good place to start. Competing factors need your business so they, too, can be successful in their business. If you have long-term needs for this type of business financing, or you compare factors and find a better deal with a less-suitable factor, you may be able to work this to your advantage and save money in the long run.

Choose the option of an open-ended contract You may believe now that you are just be looking for one-time funding through an invoice factoring company. You might find yourself seeking the same type of services in the future. Depending on your experience with the factor you work with, you will most likely consider working with the same company again. Choose an open-ended factoring agreement and you can save yourself a measurable amount of money in the future because you have already paid the initial setup fees for additional advances through the same company.

Seek the services of brokers to find the best deals Brokers can be valuable resources for companies who do not have the time or knowledge to locate a suitable factor for their business accounts receivable funding. For a minimal fee, brokers can help you to find a factor that will work with you in your situation. Because these brokers have experience working with various vendors, they will usually know of the companies to notify first and also avoid. Working with a broker can save you countless headaches and quickly assist in your financial problems.

See if you can negotiate for more money up front Just because a factor tells you that they offer 75% to 80% of the total value of your accounts receivable up front does not necessarily mean that you cannot work toward getting 90% with your upfront advance. If you try to negotiate for a greater initial advance, it is important to know that factors will generally allow for a bigger upfront advance in exchange for a higher discount rate.

Use fewer invoices for higher amounts In many cases, business will not need to finance all of their monthly invoices to have their business stay afloat. By submitting fewer, higher-dollar invoices to factors instead of several low-dollar invoices, you are reducing the factors workload and may be able to receive a lower discount rate.

Notify your clients Although factors will notify your clients that payments should be made out to them instead of to your business, it is still recommended that you inform your clients of this change yourself. This can help to address or reduce any unpleasant surprises on your customer’s side and also allows your clients to plan for these changes ahead of time. It is always important to maintain the relationship with your customers so you don’t lose their business.

Choosing the right factor for your company is an important decision and can increase the credibility of your business among your employees, vendors and customers. Factoring is an advisable solution that offers many benefits that work for a variety of today’s businesses.

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