A List of Top Questions to Ask Your Prospective Finance Provider

Factoring – or invoice discounting – is often a great idea, since you can claim a large percentage of the money that is owed to you (the amount that is specified on the invoice) up front. Thanks to financial services such as factoring, a business can greatly improve its cashflow and use funds immediately which are otherwise available only at a later date.

Despite the fact that there are many financing providers out there (banks, subsidiaries, or independent providers) and that prices and fees are usually very competitive, it still pays to look around and make an informed choice. Providers often have a set of rules and regulations which they strictly adhere to, and these can differ from institution to institution. So how do you choose the right financing provider for you and your company? Here is a list of top questions to ask to find the correct one:

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  • Collection speed. How quickly does the agency or financing provider collect the revenue that stems from the invoices? The quicker they collect themselves, the less worry they have and the more business they’ll want to do.
  • Method of collection. This is an important issue. How do they collect, and what methods do they use? Some institutions may resort to unfair / borderline activities to collect, such as calling, paying house visits, and sending more emails or mobile phone messages than is appropriate. Whilst this should technically be none of your concern, you should hire a service that remains respectful to your customers as it could affect future business.
  • Disputes and queries. Again, this goes back to the handling of customers and the respect and leniency the service shows your customers. Open communication and transparency in coming to a mutually beneficial agreement should come first.
  • Industry experience. Of course, the more experience your financing service has in the industry, the more likely your chances are of hiring someone who understands what it’s all about. How long have they been in business?

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  • References. Can they show you whom they have worked for before, and what their comments were? A business that is proud of its accomplishments will show you references without you even asking.
  • Termination of contract. What are the stipulations in case you want to end the service? Be clear on how you want them to handle your business and how you can terminate your agreement.

As with many other financing options, there are always advantages and disadvantages – however, by choosing the correct financing provider, such as, which understands your business, you can be assured of gaining a reliable partner who can inject much-needed cash into your business and improve your business cashflow.

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