Every company has that story about a client they took on whom they believed would deliver untold opportunities for new revenues yet ended up leaving them holding the bill. Bad debt losses are a part of doing business. Yet just because your past stories have had unhappy endings doesn’t mean that you can’t turn those scenarios around to benefit you in the future. Financing receivables through a factor allows you to do just that.
How? Consider how many of your clients have an established relationship with your company. At some point, they all came to you as an unknown risk. You no doubt put in an inordinate amount of research into their business history, covering such aspects as:
- Their payment history
- The current operational capacity
- Their asset portfolio
- Their credit profile
Now ask yourself if they were completely forthcoming with information right from the get-go. Sure, your dealings with them over time may have justified your initial faith in them, but can that faith be extended to every new client that you take on?
Working with Your Factor in Assuming New Clients
Your factoring partner can help to mitigate the risk of assuming a client whose contract is destined to end up as bad debt by providing you with the information needed in order to make an informed decision. In many cases, they’ll bring in that information from direct dealings that have had with that client in the past. In others, they’ll put the time and effort into researching a client’s financial statements and bank disclosures. Remember that they assume the risk right along with you, so why not let them do all of the hard work?
No company should have to look back at a failed contract and wonder what might have been. Knowing a client’s full financial capacities and tendencies going into a deal can help to greatly minimize your risk of being left with bad debt. We here at Universal Funding have all of the tools that you need to help know these things. Our experience in due diligence will help you to find those potential clients that are sure to fulfill their financial obligations to you. To see the potential impact that factoring can have on your company, take a moment to fill out our online rate form today.