What to Look for When Selecting a Factoring Company
Some factoring companies including many of the major bank owned names have a credit control service that is so poor (one is actually outsourced to India) that the customers end up taking much longer to pay and therefore the cost of factoring will end up significantly higher than first thought due to the increased amount of factoring interest that will be payable.
A factoring company with higher service levels might have quoted a slightly higher commission rate but could well end up cheaper in practice as their credit control is more effective. We have explained the financial cost penalties of signing up with the wrong factor in our factoring cost comparison.
Potential factoring and invoice discounting clients looking for the cheapest deal can be easily misled as the real cost of the facility can end up being very different to the original forecast.
Researching the factoring company
Another problem area that companies need to research before entering into a factoring facility is the initial payment against invoices which the factor will state is anything up to 85% but in reality could be considerably less as some factoring companies will consistently find a range of issues designed to keep the funding levels as low as possible.
Factoring Solutions is a specialist broker with many years of industry experience. We know which factors are unable to make decisions quickly, which ones are so understaffed that their sales ledger management and credit control are appalling and which ones’ despite claiming to operate a “flexible and personal service” are actually governed by a strict rule book. “Yes” it is a minefield when it comes to picking the right factoring company.
Our years of industry experience are available FREE of charge as we do not charge either for advice or for introducing companies to the most appropriate factoring company for their particular circumstances so contact us on 01827 707680 today.