how does a factoring buyout work

Here Is How a Factoring Buyout Works

If you are currently with another factor and looking to transition to Eagle Business Credit, we will be happy to help you with this buyout process. It may seem intimidating to switch factoring companies when your funding is on the line. However, it is a simple and quick process. Here is how a factoring buyout works.

What is the first step of a factoring buyout?

First of all, we’ll need to look at the contract that you currently have with your factor. There may be a period in there, a contract term, and there may be a termination penalty. We’ll all want to understand that before we proceed. Again if you haven’t already, please share that contract with us. We’ll review it and discuss it with you.

When does the new factoring company contact the existing factoring company?

Before contacting your existing factor, we will check to make sure you are happy to proceed. Buyouts happen all the time in factoring, so it is not an uncomfortable process. We only contact your existing factor when you give us permission to do so. We will not push the process any faster than you are comfortable. We will ask your existing factor for a payoff or termination agreement, and then we can proceed.

the 4 steps to how a factoring buyout works

What is a termination agreement?

A payoff agreement or termination agreement is a document from your existing factor. This document outlines terms for your new factor to buy out your contract. It needs to be signed by three parties: your current factor, us (the incoming factor), and you (the client). A main reason for the document is to ensure a smooth transition.

change factoring companies

Will your funding be affected by a factoring buyout?

And what it serves to do is make a very smooth transition. We are members of the International Factoring Association. If your existing factor is a member, then the transition will be smooth. Members of the IFA all abide by a common code of ethics. This provides a very smooth transition process with the emphasis being on continuity of your funding. There is no delay.

A factoring buyout works quickly so you keep your business funded

We are ready to pay your existing factor as soon as all parties are on board. We will speak to you every step of the way during this process. We will not proceed with anything if you are not comfortable. So, if you have any questions, please let us know. This process is something we do all the time, and it’s a very smooth transition.

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