How the Best Factoring Companies Differ From Collection Agencies

Factoring is an option that many multi-million dollar businesses are turning to in order to maintain steady cash flow between client payments. To use factoring properly, you need the help of a quality factoring company like Universal Funding. Since factoring involves the selling of unpaid invoices to another entity, some people view factoring companies as collection agencies. This is not the case, however. The best factoring companies differ from collection agencies in some very important ways.

Preserve the Client Relationship

Your relationship with your client is vital for your business. Even when your client is late on payments, you do not want to tarnish the relationship because there is still the potential for payments to be received and more business to be carried out in the future. Your clients might not take too kindly to being turned over to a collection agency. When you sell your invoices to a good factoring company, the factor takes care to make the transition as smooth as possible. They only contact your client if and when absolutely necessary; usually in the form of a bi-monthly statement. Preserving your relationship with your client is important.

Treat Your Clients With Respect

When the best factoring companies do need to interact with your clients, they do so with respect. These companies understand that your clients are likely to interpret their interactions with the factoring company like interactions with your business. They are basically another representation of your business, so respect when dealing with clients is imperative.

No Need to Hound

Collection agencies chase down clients who fail to pay. Factoring companies tend not to hound your clients in this manner. Instead, if the invoice remains unpaid after a designated period of time, the company explores other options with your business and your client.

The Services You Want

Universal Funding is not a collection agency, so you can expect your clients to be treated with the respect they deserve. For more information about our factoring and financing services, contact us via our rate form.


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