Looking for a factoring company that can help you with your invoice financing is not going to be easy. Remember that this is not the traditional solution where you borrow money from a lender to support the financial needs of your business. They finance your receivables in advance as you offer credit payments to your customers. To help you find the best factoring companies in new york, here are some tips that can help.
Know What Your Terms Are
Sometimes, the questions that one asks can greatly affect their next move. And that is the same when choosing a factoring company. You will need as much flexibility as possible from this company. If flexible rates are offered, then entering a long term contract can be considered. Usually, the industry standard for factoring agreements is a 1-year-contract. And this contract will automatically renew within a certain period of time. So make sure that you know if the terms offered as well as the rates are something that you can work with.
Find Out About the Application Process
Unlike loaning funds from a bank or other lending institutions, the application process for a factoring company is usually much easier and less hassle. You are not borrowing funds so there should be no credit history checks required. However, there are factoring companies that will take into account the credit ratings as well as the payment histories of your customers. If the company takes a long time for them to approve your application, then go somewhere else. You might experience the same issues once you need your invoices funded. They might not be able to assist you in a timely manner.
Additional or ‘Hidden’ Fees
You do not want any hidden fees to surprise you. So ask the factoring company about their charges. Of course, this will depend on the industry as well as the factoring company that you are involved with. Mostly, they charge a fixed factoring fee which is usually a certain percentage of the total value of the invoice. However, if you are not aware, there are also companies that charge additional fees like for money transfers, collateral, and more. So ask about processing fees, quick pay, minimum-volume charges, and so on.
Factoring Company Has Enough Capital
As your business is growing, your much-needed capital is increasing as well. So the factoring company that you choose should have the capability to grow with your business. Do your research and find out about the factoring company’s client base and capital structure. You can ask them what was the largest factoring volume they catered to. Just remember that factoring companies that have been in this business for a long time now usually have enough capital to finance your growing business.
Always remember that when it comes to choosing a factoring company, a little research can go a long way. So use the internet to your advantage. You can also ask anybody you know who also uses the services of this company. Find out everything that you can about the factoring company. It will help pave your way to make a well-informed decision.