There is no doubt that invoice factoring has become a convenient way for businesses to get fast payments and keep cash-flow consistent. For companies and startups experiencing significant changes and rapid growth, accessing quick funds is necessary to keep up operations. To avoid business failures and cash-flow issues, companies turn to accounts receivable factoring as a reliable solution.
Reputable companies like Porter Capital have made factoring unpaid invoices an easy and smooth process. Invoice financing companies buy unpaid invoices and pay up to around 95% of the invoice value to their clients upfront. They then collect directly from the customers at the end of the payment term. Not all factoring companies provide the same benefits, customer service, or additional services with their factoring agreements. It is essential to know what you’re looking for when choosing an invoice factoring company to work with. This article outlines five important considerations when choosing an invoice factoring company.
There are plenty of invoice financing companies, offering a variety of financial benefits to the businesses. Choosing the right one requires you to consider aspects like pricing, stability, flexibility, payment time, and reviews.
1. Pricing – Transparent Fees & Rates
Factoring rates are one of the more essential aspects to consider when choosing an invoice factoring company. It is necessary to do some homework before making the final decision to avoid getting into a long-term contract with hidden fees, such as additional administrative costs when the funding cycle ends. Overall, several things may affect the factoring fee. Additional fees may include monthly average purchase volume, number of customers aka account debtors, contractual commitment, and the amount of sold invoices. Even a slight variation in any of these things may lead to a substantial change in the invoice factoring company’s fee structure.
Working with a stable invoice financing company is important when it comes to helping your business grow. You need to work with a company with a reliable and robust track record in the finance industry. Knowing you partner with a stable invoice financing company provides you with confidence that your business will be taken care of. One way to ensure that you are signing with a reliable factoring firm is to choose one affiliated with the IFA (International Factoring Association). IFA members adhere to stringent policies, business ethics, and practices. Porter Capital is a member of the IFA, along with several other associations and accreditations. Porter has been in business since 1991 and has a stellar reputation in the financial world.
The third important thing to consider when picking a factoring company is the flexibility it offers clients. It is essential to inquire about the following things when choosing an invoice financing company.