Here are a few additional tips to help you save money and have an overall better experience when choosing a factoring company for your business funding:
Opt for an open-ended contract
You may just be looking for one-time funding through an invoice factoring company today, but there is always the possibility that you will use factoring as a business financing option in the future. If you choose an open-ended factoring agreement, you can save yourself hundreds or even thousands of dollars in the future by by passing the need to pay setup fees for additional advances through the same company.
Get quotes from several different factors and negotiate
Accounts receivable financing is just like any other large transaction in certain respects, and there is usually wiggle room to negotiate a better deal, especially when you take the time to obtain a factoring quote from different companies. Factors need your business so they can stay in business, so if you have long-term needs for this type of financing, or you shop around and find a better deal with a less-suitable factor, you may be able to work this to your advantage and save some money.
Utilize brokers to find the best deals
Brokers can be valuable assets for companies who do not have the time or expertise to locate a suitable factor for their business accounts receivable funding. For a small fee, brokers can help you find a factor that will work with you in your situation, and usually know the companies to avoid, which can save you countless headaches as well as temporary financial woes.
Try to negotiate for more money up front
Just because a factor states that they offer 75% to 80% of the total value of your accounts receivable up front does not mean that you cannot get 90% initially. Factors will generally allow for a bigger up front advance in exchange for a higher discount rate.
Use fewer invoices for higher amounts
In many cases, business will not need to finance all of their monthly online invoices.By submitting fewer, higher-dollar invoices to factors instead of several low-dollar invoices, you are decreasing the factors workload and may be able to receive a lower discount rate
Notify your clients
Though factors will notify your clients that payments should be made out to them instead of to your business, it is generally recommended that you inform your clients of this change of payment venue yourself. This can help to alleviate any unpleasant surprises and also allows your clients to plan for these changes ahead of time.
Choosing the right factor for your company is an important decision that has the potential to catapult your business to the next level. Factoring is a viable solution offering many benefits that work for a variety of todays businesses.