 Once you inquire about opening a Factoring account you have opened the flood gates. Being your Factor of choice and one of the primary things you find in the ads and on the websites are high advance rates and low fees. And every factor online is grappling for this chance.
There are some things you need to know. Because of the Factoring companies have a cost of funds, fees only go slow. Then you need to make sure you accomplish that the interest rate or your discount is not always your total cost of funds. However, your formal documents will have it all make out. You will need to Read the Fine Print if you of course re getting similar quotes and then have one come in really low compared to the others.
So, what is more important than your fees?
Services and Reporting
Being so focused on the advance rate and fees, many people sign up with the Factoring Company offering the lowest fee. And this can be a huge mistake. Remember these are your customers. You worked hard to get them. Then after the fact, you find out they have horrible services and reporting and worse case you cause issues between you and your customers.
Before signing the dotted line, ask the factor to:
1. Show you their reports and schedules.
2. Ask what type of online reporting is available to you.
3. How do they handle collections.
4. Ask for some references.
5. Find out how familiar they are with your industry.
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