Choosing the best debt factoring company to work with can be a little bit tricky as most people are often in a desperate situation when they get to the point of getting help from a factor. IN such a case, people often end up getting help without doing much research on the company that is giving those help. You need to be able to know whether the company is reliable as they will have contact with your clients and you do not wish to tarnish your reputation. It is also crucial that you know about the company and their strengths.
- Financial strength – A company that has been in business for a while is a good place to start. As you are looking for financial help, it is important for the help to be from an entity that is financially stable. It should be able to withstand economic downturns and it should be able to stay in business in case of such stresses.
- The minimum amount – Having a minimum amount on the clients you wish to factor is common for most debt factoring This means that clients with a low receivable amount may not be accepted by the company. You thus need a company whose minimum amount is not too high. This way, you can qualify for a higher amount of credit as more of your clients can be used in the factoring process.
- Fees transparency – Most financial institutions even debt factoring companies have fees and they may not be too transparent about it. This could lead you into more debt instead of helping you deal with your cash flow problems. Transparency in fees is important as you know what you are getting into. You fully understand your debt and how it will be paid and the fees the company will be deducting from it all. This also helps you decide whether you will take the deal or not.
- The rate of advance – A company that has high rates of advance on your invoices is a good one. This means that they will give you a high rate advance e.g. 70-90 percent upfront. Such a rate gives you more money to work with for your cash flows. In a way, it shows you that the company believes in your clients.
A company that offers personalized solutions are a good pick. They ensure that they work with you until you are satisfied.