Look for Value, Not Just Cost
When looking for the best option for your business, you want something that will align with the way you do business. Everyone’s first thought is “how much will it cost me?” While price does play a factor, it is important to know what you are truly getting for the price tag. What is the true value of your return that helps make your decision in selecting the best factoring company?
While many programs can be similar, not all factoring companies are the same. Who is going to best meet your needs?
EXPERIENCE IN FACTORING
The amount of time a company has been factoring, is a good sign about their knowledge, ethics, and operations. Always look at the number of years they have been providing factoring services. Factoring is a unique service requiring they have extensive capital to fund your invoices, and that they have the ability to help improve your cash flow.
When you call your factoring company what would you expect from them? For starters, you would like them to pick up the phone. I can’t tell you how many times I’ve heard stories of companies that don’t answer a ringing phone. I expect to wait on hold when calling the manufacturer of my desktop printer, but when I have an inquiry about an invoice or need to credit check a potential customer, I better not have to wait.
When you leave a message or send an email, you shouldn’t have to wait 24 hours for a response. You should experience quick service from the first time you call, and everyday you call. Make sure you have a dedicated representative or account manager that will know your account personally and that you are given direct access to contact them.
When it comes to the people who are handling your finances, you want to make sure you have a professional relationship with them. There’s nothing worse than dreading contact with your own representative due to a poor relationship. Before you make your final choice of a factor, make sure you connect with them. It is important to experience multiple conversations with the factoring representative to ensure his/her service meets your needs and remains consistently friendly and professional. You will be dealing with them frequently throughout the month, and they will also be dealing with your customers on your behalf. Choose a factoring company that will represent your business well.
Signing up with a factoring company can be a big step. Do you fully understand the program details? Do you know how the service will benefit you? Ask yourself do you understand the explanations they are giving? If you ask them to explain again, are they helpful, freindly, and do they find a way to give you the answers that you need?
When looking for the right factoring company to fit your business needs you may ask to speak to some existing clients. This will give you an idea as to how the factoring company’s processes work and how well they work with their clients. If the factoring company can’t or won’t provide references, you may want to look elsewhere.
COMFORT WITH THE COLLECTION SERVICE
Comprehending the collection process is important. The Factor will be collecting directly from your customers, so know the process of invoicing, calling, and collections. Ask what the average collection period is. Who will be doing the collection calls? It’s important they personally understand your business. At Steelhead Finance, your own account representative and assistant will be doing your collection calls.
COST TO FACTOR
Comparing rates is important but you must take into consideration what level of services you will receive for the price from your invoice factoring company. Steelhead Finance offers a variety of services beyond cash flow maintenance to assist your business operations. Ask about industry specific discounts and services that we offer.
Understand the exact fees involved before signing any paperwork. Know what might trigger fees being raised or lowered. You’ll discover the best factoring companies will disclose fees instead of hiding them.
Under what conditions might you experience penalties to your account? You will want to know what circumstances to avoid and how likely you might run into these situations. You will want this information in writing.
DURATION OF CONTRACT
You should carefully consider the time period of your agreement. There are many companies that require a long-term contract (12 months or longer). Steelhead Finance does not lock you into a long term contract. If you have intentions to grow or change your business model then avoid factoring contracts that bind you for 12 months or more.
Find out if you will have instant access to your account information and reports or when you will receive updates or notifications. Find out what those reports will include.
EASE OF EXIT
Read the fine print that explains how easy it is to get out of a contract or agreement with a specific invoice factoring company if you decide to make changes. Is there a penalty period or fee? Steelhead Finance employs a 90 day termination notice on average to make sure all paperwork gets finalized.
There are many things to look for before signing up with a factoring service. Think about the initial communication, the company’s reputation, the extra value-added services, and the factoring company’s ability to actually look out for your business.