Invoice Factoring & Financing: How to Choose the Best Factoring Company

Selecting a factoring company must be undertaken with caution. A careful assessment of your options can make a difference in your experience. If you don’t want to make a disappointing or costly mistake, consider the following factors before choosing a factoring company.

Longevity

How long has it been in the industry? Most businesses that turn to an invoice factoring company in canada for help need critical funding. You’re likely in the same position. You can’t trust just any company that comes along in your searches. You need a stable and reliable firm that can provide the funds you require. And one mark of reliability is longevity. A company that has been around for years inspires more confidence than a company that’s only been around for a year or less.

Financing Caps

Some companies put a cap on how much funding you can get. That’s far from ideal. The point of selling your outstanding invoices to a factoring company is to get the cash you can use to support your operations and meet your financial obligations. A cap gets in the way of that. It also tells you that the company isn’t the right factoring partner for your operations. Keep looking until you find one that doesn’t offer a cap on their services.

Cost

Factoring services are paid. That doesn’t mean they need to be expensive, though. Find out what the rate is. That’s another point of consideration when you look for a factoring company. Also, be sure to go over the contract and customer service terms. Is the factoring rate fair, given those terms? Are you getting a solid deal?

Agreement Terms

Before you sign on the dotted line, are the terms advantageous to you or the provider? The terms should be fair. If the terms only favor the provider, that’s not ideal. You should look at the repayment schedule. Will that work for you? What about the advance rates? Is there a cancellation fee? What are the terms for that? What is the contract length? Get answers to these questions before you choose a factoring service.

Speed of Funding

How soon can you get the funding? Some factoring services can send the money in as short as 24 hours after the application approval. Take the time to determine how long before the company can send the funds. Some take days or weeks, and if you’re in a bind, those arrangements will not work for you. Also, some companies charge extra for faster payment terms, so be on the lookout for those details. You can avoid additional fees if you know the conditions or terms that cause them.

Communication

Is it easy to communicate with the team? Is the factoring service professional? Do they have the expertise and skill to help customers? If they aren’t responsive to your inquiries now, look elsewhere. The lack of response can indicate the company’s customer service quality. You want a factoring service that is responsive to your needs. That is a better and more efficient factoring partner for your needs.

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