By Ronni Peel
Wondering how to keep your business afloat, yet your debts are yet to be paid. It might be time to consider seeking the services of a factoring company. This type of company provides working capital to businesses with unpaid invoices from creditworthy customers.
When looking for an Austin factoring companies, or any other state, you need to be careful and do thorough research. Here are some factors you should consider when seeking the services of a factoring company;-
Business Type
Remember that some factoring companies are specific to particular business types. These include businesses in the medical, transportation, and technology sectors. Therefore, seek a factoring company that is specific to your business type.
Terms and Rates
Factoring companies offer varying terms and payment rates. While some companies may attract customers with low fees, they may have multiple hidden additional costs. These include the application, field examination, background check, and monthly processing fees, among others.
Thus, ensure you thoroughly read the terms and conditions before committing. Clarify any vague statements to avoid future misunderstandings and frustrations. Besides, find out whether the factoring company has the financial capacity to support you as you grow. This minimizes the chances of collapse due to lack of funding.
Experience
They say experience is the best teacher. Undoubtedly, this adage also applies when seeking factoring company services. Notably, one that has been in the industry for long will be better than a startup.
However, do not the number of years fool you into thinking that a company is more experienced. Go through its portfolio to discover the number of tasks handled and whether they were a fail or a success. Read customer reviews online and inquire from experts in the field before making your final decision.
Flexibility
The business space is quite unpredictable. Therefore, always ensure that the company is versatile and flexible to accommodate changes. Look for a company that allows you to decide on the invoice that you would want to factor. Avoid situations where you have to factor in all your invoices, reducing your control over your working capital.
Customer service
Find a factoring company with good customer service, not only for you as a business owner but also for your customers. Since your clients will interact with the factoring company more, they must portray professionalism in handling clients. Ask for referrals from other clients and read online reviews to increase your chances of landing a company guided by professionalism.
Recourse or Non-Recourse Funding
Recourse funding necessitates that the owner takes up the risk if the customer fails to pay up. Non-recourse funding, on the other hand, requires that the factoring company takes up the risk in case the client fails to pay. Given the increased risks associated with non-recourse, most factoring companies offer recourse funding. Notably, those who provide non-recourse have a slightly higher fee payment.
Conclusion
Factoring companies help businesses grow and achieve their goals. These tips should help you find the appropriate factoring company for your business, despite your location.
