Invoice factoring is a great way to streamline cash flow for your business. However, not every finance company offers the same terms. Oftentimes, a factoring broker in Savannah, GA, can steer you in the right direction and help you find the right fit. Here are the criteria you should be looking at before you make your final decision.
The factoring company charges you a fee for their service. That part is obvious. The question is, how much do they charge? Additionally, you have to make sure that you understand their fee structure. Simple fee structures are the best because they don’t leave you guessing. Most factoring will pay you a certain percentage of your invoice amount right away and the rest when the client pays. You need to watch for hidden or additional fees that might not be so obvious as these can add up significantly.
There is also a difference between recourse and non-recourse factoring. With non-recourse factoring, you’re not liable for the invoice even if the client never pays. Non-recourse factoring puts the risk on the factoring company, but they’ll charge more for it, too.
When you’re running a business, flexibility is important. You probably don’t want to get locked into a contract that you can’t fulfill. If you’re required to factor a certain number of invoices a month and fall short, you don’t want to get hit with fees. Additionally, you may have some clients who are great about paying their invoices promptly. There’s no need to send those to a factoring company because you already have guaranteed cash flow. However, some financing companies require you to factor all your invoices, not allowing you to pick and choose.
Before you do business with a finance company, you must verify their reputation. It’s easy to find reviews on the Internet by doing a quick online search. If the company has been around for a few years, that’s also a good sign they’re doing something right. It also helps to compare different companies with each other. If one of them makes an offer that seems too good to be true, it probably is.
Most factoring companies try to make the process as convenient as possible by allowing you to submit your invoices online. That means you probably don’t ever have to call or talk to anyone. However, there are times when you will need some help. It’s good to know when their customer support is available and how you can get in touch. The more contact options they have, the easier it will be to get your issue taken care of. Also, if you prefer to send an email, you won’t like a company that requires you to call instead.