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How to Choose the Right Factoring Broker

How to Choose the Right Invoice Factoring Broker

If you are an entrepreneur or small business owner, you know that having access to working capital when it is needed can be a monumental challenge, like when your customers haven’t paid their invoices and you have to make payroll on Friday. For many businesses, invoice factoring is the answer to these short-term working capital problems. If you are considering factoring as an option for your business, here are the basics you should know.

What Is Factoring?

Factoring allows business owners to sell their outstanding invoices to a factoring company in order to obtain cash quickly to cover immediate working capital needs within the business. Invoices are sold at a discounted rate. Factoring can be done quickly so business owners can factor their invoices and have cash within as little as 48 hours. Factoring is not a loan so it will not be a liability on your balance sheet, it does not depend upon your credit rating, and it will not require a lengthy application and approval process.


How Do You Choose the Right Broker?

Using a Invoice Factoring Broker enables you to to find the right factoring company for your specific needs. There are many options available to you when choosing a factoring broker in Kennesaw, GA. Your research should include the following:

  • Fees. Factoring fees are dependent upon a number of elements, including the age of your invoices, the creditworthiness of your customers, and the amount of risk the factor assumes when purchasing your invoices. Ask a lot of questions and speak to multiple brokers to get a feel for the process and the different fees that may be involved.
  • Customer Service. In most cases, once the factoring company purchases your invoices, your customers will receive notice that their invoices were sold and they will make their payments directly to the factor. If the factor has poor customer service and is perpetually unpleasant to your customers, you risk losing business. You should be certain that the factoring broker will reflect your values when finding the right solution for you.
  • Flexibility. When it comes to factoring, one size does not fit all. You want your factoring agreement to perfectly fit your needs. Ask the brokering companies about the length and scope of their contracts to make certain you have the room to make an agreement that is right for you.

With careful research, you can find a factoring broker that will help you meet the needs of your business.