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How to Choose an Invoice Factoring Company

Invoice Factoring Business Woman Touching Light BulbAre you sick of waiting for invoices to be paid? You’re not alone. Invoice management is one of the biggest frustrations of B2B companies. Waiting for up to 30 days to receive payment on your invoices not only kills your cash flow, but also your credit.

Many business owners wait until their cash flow is completely drained and seek help from banks. In today’s economy, it’s nearly impossible for a business owner to get affordable funding. You end up paying ridiculous fees, sky high rates, and end up waiting up to 90 days to get payments. Thankfully, there’s an alternative.

Choosing the Right Invoice Factoring Company

Getting financing through a factoring company will allow your business to get up to 96% of your total invoices in just 24 hours or less with low rates. It may seem like there are endless amounts of factoring companies out there—how do you choose the right one? Ask yourself these four questions to determine which factoring company is right for your specific needs.

Question #1: Are there any hidden fees?

Be thorough in your research for an invoice factoring company. Take a look at the fine details of each factoring company you look into. Do they charge for credit checks? This is one of the most expensive hidden fees that many factoring companies sneak into your contract. Our factoring company offers free credit checks to ensure that your business can keep as much money in its pocket as possible. No matter if you’re factoring one invoice or 20, this fee can add up and cost your business a serious fee.

Question #2: Does the factoring company offer non-recourse factoring?

One thing you should definitely look for in a factoring company is if they offer non-recourse invoice factoring. With non-recourse invoice factoring, the factoring company will be able to advance you funds without the risk. If the invoice factoring company purchases an invoice from your clients and the invoice does not get paid, the factoring company will take the responsibility those charges.

This is a major benefit to your business. With other invoice factoring companies, if you have factored thousands of dollars, and your customer fails to make payments, you would be responsible. This fee is something that can completely kill your cash flow and possibly your business’s reputation.

Question #3: How much cash will I get advanced upfront?

With each individual invoice factoring company, you will see a series of different percentages that can be advanced. It is important to find a factoring company that can advance you the most money upfront.

For example, our factoring company can advance you up to 96% of your total invoice amount in just 24 hours or less. That means that you can get almost the full amount of your invoices practically overnight. With this immediate payment, you can improve your business’s cash flow and secure capital fast.

Question #4: Does the factoring company offer different types of invoice factoring services?

Look to see if the invoice factoring company provides more factoring services. Some factoring companies offer specialized factoring services, such as spot factoring. With spot factoring, you can factor a single invoice at a time, rather than a larger sum. For some small businesses that don’t have many clients, this can be a huge benefit. For example, if you are a small business, most likely, you don’t have the funds to take on larger clients. We’ll help you secure those funds right away so you have the appropriate amount of funds to complete the project.

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About the Author:

Robert Bernfeld started in the commercial finance industry in 1974. His early years included positions with Aetna Business Credit and Foothill Group. During the next thirty five years. Mr. Bernfeld established both equipment leasing and accounts receivable factoring companies. He partnered in founding Business Facilitators, Inc. in 1999. Mr Bernfeld graduated from the University of California, Riverside in 1974 and received his Juris Doctorate from Loyola University School of Law in 1977.

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