What do customers say when they find out that I’m factoring after being notify them of the assigned invoices?
We understand your concern. Customers have other vendors offering terms that may be factoring as well. Factoring is a sign of strength. Many Fortune 500 companies use factoring for their funding.
Will I lose control of my billing and posting?
Never! Factors purchase the invoices once you have generated them. Then, they post upon receiving payment. Once posted, factors send you the posting report. You have access to your factoring account, letting you see all open invoices.
What if a customer does not pay a factor?
There are two reasons for non-payments by customers. First customers goes bankrupt or insolvent. Second, any other reason. Most factors will absorb the risk of the debtor (customer) going bankrupt. All other reasons have to do with product or service provided for which factors cannot be responsible. As such, factors can either take an exchange invoice to collateralize the advance, or factors can charge the non-paid invoice back to you through a payment from your reserves.
Why do factors not advance the invoice’s full value?
There are a multitude of reasons why customers pays less than the invoiced amount: product or service insufficiencies, cooperative marketing expenses, charge backs from previous invoices, and reasons too lengthy to elaborate upon. In the underwriting process, factors evaluate past history of such “dilution” events to determine a safe advance rate, which is based on evidence in the applicant’s historical payment profile. Consideration on advances is also dependent on the credit profile of the debtor. Advances can be set using the credit profile of the debtor. Advances of 70% and above are common for factors. Remember, you are going to get the balance less the factoring fee once the invoice pays.
How often can I factor my invoices?
Factors set up a schedule for you based on your cash flow needs. As long as factors can verify invoices representing goods or services provided, factors can fund. Schedules are designed for you.
My credit history is not very good. Will that disqualify me from factoring?
Unless there are significant legal / moral issues in your profile, factors will be able to move forward.
How long does to take to open an account?
If you are on top of requests for documents, factors can have your account open, with the capital in your account, within 48 hours. In some cases, a bit sooner, while some may take a bit longer.
Download the 100K Investing app and we will have a factoring company contact you to complete the process.