What generally is the role of factoring companies? Can we do without them? This is a catch situation. Small companies that are struggling financially cannot do without them as no bank or financial institution ever wants to do business with them. Financial institutions normally feel that lending out money to such struggling entities might not bring in the required profit. It is therefore important that as we look at the benefits factoring brings, we should not forget to look at their role in the industry as a whole. It is also worth noting that for you to become a candidate, you must be commercial company.
Factors do not deal with individuals. As a company struggling to keep afloat because of unpaid invoices, you need to look at other issues before factoring your invoices. The companies are well trained on debt collection but how would your customers react when you bring a third party into the picture? Would they be comfortable doing business with you again? It is therefore important that before you send out the invoices to the company in question to gauge your customers and find out what their reaction would be. Would they be comfortable doing business with you again?
You should not hire the first factoring companies that you meet along the road. The reasons being, the factoring industry is quite large and there are different companies offering different programs. Sound advice would be to get one that is in your industry and shares the same sentiments. It is therefore the role of the company to ensure that they have your interest at heart without embarrassing your customers. There are customers who in the real sense would not be comfortable having their invoices factored. Also ensure that you get a company that does not include hidden charges.
Such hidden charges are clauses that you rarely get to note when signing an agreement. If you are no sure how to go about it, then there is absolutely no harm with seeking legal advice. You’d better be safe than sorry. It might be costly and time consuming in the long run, avoid such pitfalls that you can avoid when you still have the chance to. When hiring such companies you need to look at the following integrity, customer service, level of expertise, cost and services offered. If these does not meet your requirements, you need to seek other services from people who understand how you operate and would be comfortable doing business with you.