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change factoring companies

Things to Know When Changing Factoring Companies

If your business needs are unmet, it’s easy to see the grass as greener on the other side. Be sure that the factoring company you switch to can provide the customer service, funding, and support your business needs. Otherwise, you’re wasting the time you can channel into growing your business. Ask about your concerns and needs when searching for a new financing partner.

Reasons you may want to change factoring companies:

  • Customer service is lacking
  • The factoring rate is too expensive
  • Your factor is charging additional fees

Should You Change Factoring Companies?

A finance company offering accounts receivable funding may sound attractive with low rates advertised and a quick set-up process, but if you signed an agreement unaware of additional fees for late customer payment or the quality of customer service at your current factor, then a change in companies may be in order. This process can be time consuming and put a pause on your business funding, but many factoring companies are comfortable with the buyout process involved. A smooth transition is possible with an experienced factor.

Contact the factoring company you are eyeing and ask about these areas of service:

  • Speed of Funding
  • Access to Account Managers
  • Advance Rates
  • Penalties and Fees
  • Contractual Commitment
  • Additional Services
  • Industry Familiarity
  • Buyout Process and Costschange factoring companies

Speed of Funding

Some factors only fund businesses once a week. Others fund daily as the invoices are submitted. Evaluate your business funding needs and whether the speed of funding is of high importance to your operations. Eagle Business Credit funds invoices as they are submitted. We offer same day funding to our clients.

Access to Account Managers

There are few things more frustrating than needing answers from a company and having to jump through hoops to get those answers. Business financing can be stressful, as your livelihood depends on your business operations. We understand that, and we provide access to decision-makers that are intimately familiar with your account and your funding needs. Customer support at Eagle Business Credit is second to none with our guarantee of transparency, professionalism, and decades of invoice factoring experience.

Advance Rates

Factors advance invoice payment to your business at a discounted rate. This rate is typically between 70% and 90%. A business owner may decide they want a higher advance from their factor, and this may lead them to switch factoring companies. When shopping for a new factor, be sure to ask about advance rates specific to your industry.

Penalties and Fees

Maybe you signed a factoring agreement with a 1.5% factoring fee. This sounds great, but did you check to see if there are hidden fees in the contract? Some factoring companies charge a fee for same day funding, monthly fees, application fees and more. These fees raise the cost of factoring and increase frustration for the business owner.

Contractual Commitment

Traditional factors may lock your business into a multi-year agreement, requiring a termination fee if you wish to stop factoring. Be sure to understand the terms of your contract length and whether your business will want to terminate the factoring agreement before the duration. Ask factoring companies the duration and terms of the contract, including early termination fees or notices required.

Additional Services to the Funding

A factoring company advances invoice payment to your business without waiting the 30 to 90 day credit terms, but does your factoring company offer any additional services? Does your factor offer both recourse and non-recourse factoring? Some factors offer back-office support in addition to advancing payment, completely free. These services may include credit checks, advisement, and collections processes.

Industry Familiarity

Factoring companies may specialize in certain industries and offer expert service to those sectors. Whether you operate a staffing, trucking, or distribution company, you can find a factoring service that is tailored to your needs, managed by industry experts. This familiarity and experience within your industry will simplify the factoring service for you and your customers.

Buyout Process and Costs

Only one company can finance your invoices at a time by law. A buyout process is involved in switching factoring companies, but many factoring companies are familiar with the process, so this simplifies the process on the client-end. The new factoring company will pay the old factoring company based on a variety of items. Understand what your business will be paying in the buyout agreement and understand why you may be contributing in the buyout.

Eagle Business Credit is familiar and experienced in the buyout process of changing factoring companies. We offer low rates with no “hidden fees.” Our commitment to our clients alongside our customer service and low rates all work to best serve your business. Our back-office support includes credit checks on your customers, 24/7 online access to your account, and direct access to decision makers all free to your business. See what our accounts receivable funding can do for your business. Why wait to get paid?