One of the most vital things to consider when starting a factoring contract is your ability to stop factoring. There are several reasons you might not need to factor invoices anymore.
- Your customers are now paying quicker.
- You’ve added more customers and diversified your income sources so you aren’t as vulnerable to one customer.
- You’ve built up a savings or contingent fund that can carry you through cash shortfalls.
- You’ve added your own staff to manage credit checking new customers.
- You’ve added your own bookkeeping staff to manage payables and collections.
However it happens, does your factoring company allow you to exit factoring? The time to consider this is before you sign the contract. Make sure you’re not entering into a long term contract (12 months or more).
Look for something that’s closer to a short term termination notice. This will allow you the flexibility when the time is right. Oh, and by the way, congratulations! We’re always happy to see businesses stabilize and grow!