As a business owner, you don’t always have time to wait for your clients to pay their invoices. Invoice factoring provides a very flexible form of financing to companies. Factoring involves selling a company’s accounts receivables to a factor in exchange for an upfront payment. The factor pays you a percentage, typically between 70% and 90%, of the money owed on each invoice to you and then once the invoice is paid in full by the client, the remaining percentage owed is then released to the you, less a small factoring fee. While this is much more advantageous than opening up an additional line of credit or applying for a business loan, it’s important to be careful when selecting a factoring company in Kennesaw, GA. To ensure that you choose an honest company, here are a few things to consider.
- The rates being offered. Because invoice factoring is a type of finance, there are usually fees involved. Before signing a contract with a factor, it’s important to consider their rates and the percentage of the invoice that will be dispersed up front. Some of the best invoice factoring companies pay 90 percent of the invoice up front and then release the remaining 10 percent after it has been paid in full. Reviewing these terms and conditions ensure that you keep the most money in your pocket.
- The reputation of the company. The factor you choose will be dealing with your money and your clients. For that reason, it’s important that they have a good reputation. Before choosing a factoring company, look into their past relations. Do they have a satisfied customer base? What are their collection rates? This information will give you a better idea as to whether or not they treat their clients fairly.
- Contract terms. If possible, avoid signing long term contracts with minimum fees with factors. A good factor won’t require a minimum fee, but is available when needed. Many factors try to lock clients into long term contracts. The terms of these contracts generally cost you more in the long run.
Contract factoring in Kennesaw, GA, is a great way to get the money you need without having to wait for your clients to pay their invoices. By considering these three things, you’ll be able to choose a company that is trustworthy and easy to work with.