Call it default human nature but most of us are resistant to change, even when we know in the long run that the change would probably be good for us. We get comfortable with the current pace of things, we don’t want to deal with the hassle of filing and filling out new paperwork and we don’t want to re-learn new processes and procedures.
Yet if you are feeling the blahs with your current invoice factoring company and have come across a different one that seems to offer better rates, more flexible terms or superior customer service, it might be worth your while to considering a new partner for your receivable factoring company.
Pick a New Factoring Services Company with Care
Unfortunately, changing partners from one accounts receivable factoring enterprise to another can be a challenge. In many ways can require more work from you than when you signed up for the factoring receivables to begin with. This is because your existing factoring company has a filed a Uniform Commercial Code (UCC), which means only they can have the rights to your invoices.
The new factoring company will begin the takeover process in what is called a buyout (purchasing your remaining invoices to be factored), which can be a somewhat difficult process. Legally, the factoring accounts receivables process can only be administered by one company so this is the reason for the legal maneuvering.
In addition, you may have to consider whether or not you signed a 12-month contract with the account receivables factoring company. If so, this can be tricky to get out of and may require guidance from your legal team. There may also be termination fees or other add-ons associated with ending your contract with the company that has provided the factoring services.
Seek Help with Prospective Factoring Company If You Can
So make sure that whichever factoring companies you are looking to make the switch to is familiar with this buyout process so that they can help you as much as possible with the process. If they are going to be taking over the handling of your factoring accounts receivables, then see how much they are willing to help with this process to make things easier and more transparent all around.
Yet if the new company offers better rates and is willing to do some of the legwork associated with the buyout process, then, as they say, a change could do you good. You could make back the fees lost from switching invoice factoring services over time so the inconvenience and hassle could be well worth it.