If you think omitting information on your invoice factoring application will go unnoticed, think again!
While factoring receivables is a great answer for many companies who are thriving, more often than not a search for accounts receivable financing is driven by a cash flow crisis.
It may be that you have some outstanding substantial invoices but you are in a cash flow meltdown, in which case factoring may be a perfect fit for your company. In this instance, even if you have a few issues to contend with, a factor will more than likely be able to help. However, it is always worth adopting cash flow best practices to try and avoid getting to the sink or swim period of accounts receivable collection.
There are many occasions where an experienced accounts receivable financing company can find a way to collect on your overdue invoices. Many have experience in specialist industries, and have acquired years of experience approaching customers who are late payers. They are often able to work with you in the following problematic situations:
- Less than perfect financial statements and balance sheets
- Low working capital due to late paying customers
- Occasional glitches in credit history
- Accounts receivable is healthy but payments are late
Are you concerned that your late paying customers are cramping your cash flow, and they are more than likely not going to pay? What then? Under no circumstances be tempted to fabricate the truth on your factoring application.
Embellishing the truth will not help your cause. Firstly, omissions and figures that simply do not add up will lead to your application being declined. Your information will be checked against information on public record. Any discrepancies will be brought to your attention and will need to be explained.
Do not be afraid to share information with your factor. Invoice financing offers you accessibility to your cash flow, and is certainly an easier option than obtaining finance from the bank. Well-funded factors can afford to absorb more risk than traditional methods of financing, but they are still going to protect their investment and attempting to mislead by omitting information will not help your cause.
The bank may well be saying no, where a factor might well say yes. But it pays to be honest. Invoice factoring companies are used to working with cash flow issues, and they are far more likely to listen if you approach them with all the relevant information and a plan for moving forward.