Why Businesses are Choosing Receivable Factoring Companies over Banks

Receivable factoring is an excellent way to tame your slow paying accounts receivable. Factoring companies take on the burden of evaluating the customer credit, payment history, and works with net terms you have in place. In return, they offer clients an immediate advance on their receivables. Many companies see the benefits of working with a factoring firm and wonder how to go about making their choice. Following are some ideas for those companies to consider.


Choose a Company Familiar with Your Industry

One of the best things about a factoring company is that they rate your invoices on your customers, not on your business. To get the best rates, a factoring company should be familiar with the type of industry serviced by your firm. Broad service firms have experience with a range of industries, including the following:

  • Business service providers
  • Manufacturing and fabrication
  • Wholesale and distribution

Factoring firms also deal with service businesses as well, including staffing and temporary personnel, oil-gas-energy providers, and printing-publishing houses. They will provide a low-rate based primarily on the creditworthiness of your clients, not on the financial health of your business.

Factoring Resources

In addition to providing advances on invoices, the best factoring companies offer a range of other resources to aid your business. They will integrate into your existing accounting infrastructure like QuickBooks. Some offer education in the form of whitepapers or online training videos in order to help a business owner thoroughly understand the major aspects of cash flow management. Some even offer accounts receivable insurance, to protect their clients in the event of a customer default due to bankruptcy or insolvency.

A Single Low Discount Rate

Although some businesses are content to deal with their factoring company on an invoice-by-invoice basis, many find that it is more efficient if they choose a company that offers one low discount rate for all invoices, based on their customer profile. Universal Funding overs a non-variable rate, provides on-demand reports, and insurance when needed.

To find out more about one of the best factoring companies available, please fill out a rate form for a free consultation.


Leave a Reply