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What is
Factoring?
Why
Factor?
Choosing
a Factor
Cost
of Venture Factoring
Sample
Solution
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Choosing a
Factor
How to Pick a Factoring
Partner
It is important
to look for a factor with a concentration in your industry so
that the lender can understand and respond to your particular
needs. Each factor has its own specialty, whether it is
financing technology companies, transportation companies, or
manufacturing companies. Experience should always be
considered over price. |
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Here are some
other tips:
Look for a program that doesn’t require
a long-term contract. If the program isn’t working, you need
to be able to quickly move on to something else. Make sure the
program can be terminated at your request, without an
automatic renewal clause. And try to avoid getting locked into
a program that assesses minimum interest costs.
Look
for hidden fees. Are there fees for legal documents? If so,
how much are they? Are there audit fees? Are there early
termination fees? How are the fees calculated? How often are
reserves remitted?
Get references:
Find a
program that doesn’t require that you finance all of your
receivables. You should be able to choose the receivables to
finance.
Lastly, remember that it is best to view
factoring as a short-term cash management tool. It is designed
to get a company from point A to point B, and when structured
properly, will perform better than many other financing
tools. | |
