Five Common Customer Concerns
So your business needs accelerated cash flow and obviously invoice factoring is a great answer but you may have concerns that immediately spring to mind when you consider the idea of factoring.
I do not want to lose control of my billing - While factors can save time with collection of
bills, they generally do not bill for you unless requested. You produce the invoices purchased by your factor. You still have control of the process. Factoring companies keep you in the loop from posting to payment.
Why is only a percentage of the value of the invoice advanced? - The factor will consider the creditworthiness of your customers, as well as past history of interactions between your business and your customers. Once the invoice is paid, you will always receive the balance (less the factoring fee).
Does my credit history affect my ability to factor? - Factoring companies look at your customers and their ability to pay rather than your credit history, so it is safe to say that in most cases, you do not have to worry about your credit history.
Can I choose which invoices I factor? - You are free to decide which invoices you factor, and you only pay factoring fees on those invoices that are bought by your factoring company.
Will my customers know I am factoring my invoices? - Your customers will know as your factoring company will be collecting the money directly from them. Bear in mind your customers may also factor their invoices, and many Fortune 500 companies are using factoring as a fast and reliable way of making the best use of cash flow.
Invoice factoring is a growing business, offering a simple way to accelerate your cash flow. It is a viable and effective alternative to conventional options such as bank loans or lines of credit. You may have many similar questions that your factor will be more than happy to explain.