The term factoring can be simply referred to as being able to use a professional third party to ease your unpaid invoices. All the collection and payment is done by the team hired for an agreed sum of money. But over the world, the total amount given has remained relatively the same. 90% of the sum claimed is paid to you to help your business continue to run without having to seek extra funds elsewhere at a cost, which is normally quite high. This is also another solution but can be quite costly if not handled well. It is therefore important that you use professionals to handle such intricate financial matters.
Some of the things you will need to know when hiring a company factor your invoices include:
- Confidentiality – should top your list of requirements if you want to benefit great from the service. It is therefore important to seek opinions from other companies that have dealt with different factor companies for advise and the way forward.
- Penalties – some customers can be quite difficult and might take longer than necessary thereby making you incur costs that are not necessary. Discuss at great length how to handle such situations in case they arise. They will help you keep away from factoring embarrassments.
- Rates – as discussed above, it is proper to understand beforehand how many months you will pay. Some companies have clauses that customers are not acquainted with. Make sure that transparency is the key here. Never ever underestimate this under any situation.
- You will be required to sign a contract which okay. Such kind of businesses must be put into writing and therefore there is absolutely nothing wrong but ensure that as you do this agree on paying only what you are using. A lot of people have found themselves trapped in contracts they rarely understand. Do fall for that.
Lastly, the above notwithstanding, it is still upon you to choose the best company to help you make ends meet when nothing seems to work. Small businesses to be precise run on a limited financial structure and when customers choose not to pay in advance they totally mess you up. If a customer seems too busy to talk to you on phone or answer your emails or have nothing to do with you, then that in essence is a red sign. Look for help when there is still enough time to do so.