Every business that is looking to finance account receivable needs to know how the finance company is going to operate before getting into a financial relationship. You want to make sure that you know how they operate and make sure they are knowledgeable about your industry. These topics and questions are so that you can select the best factoring company and avoid the biggest misunderstanding that occurs when starting your relationship.
Knowledge of Your Industry
- How many customers do they have within your industry and what percentage of their portfolio does it make up?
- What is their average customer size? (actual, not where they want to be)
How They Operate
Ask the Funder to take you through a transaction from beginning to end. Below are some questions to help direct the conversation and ensure you get all the information.
- How do I submit my invoices?
- Do you fund the invoices same day I submit them or the next day?
- What is your verification process?
- How do you handle the collections?
- What happens once the invoice pays?
If I run into a problem or need to change something, what would happen? Please take me through your chain of command. Will I be working with a dedicated Account Executive or an Account Management Team?
Please also make sure to have an understanding of:
- How their system works from a technology perspective. Is it mobile? Does it update in real time or batch overnight? Will collection efforts be shown and is it interactive? Does their system translate to a specific accounting software better than others?
- Do they offer additional financial services to assist you as you grow? Do they have any strategic alliances? Get an understanding of how each program works and if it is outsources, how seamless or interactive it will work with what you are currently doing.
You should always have a good understanding of any financial relationship and these questions will help with that process. The most common discord occurs during the adjustment period with your factoring company. Asking these questions up front will eliminate most of the adjustment period misunderstandings for both you and the funder.
Start searching for accounts receivables financing right now. Just complete out our find-a-factor form to find the perfect factor for your business!
We’re here to help you get the financing assistance you need at terms that work for you. If you have any questions about the process or the results you’ve received, don’t hesitate to contact us via our online contact form or by phone at 903-776-4NFG (4634).