Choosing the factoring company

Not all factoring companies operate the same way so we have set out some guidelines to ensure that when discussing factoring with a potential provider, you know which aspects need covering to ensure that you get what you want.

Term of Contract and termination clauses - A typical factoring agreement will run for a minimum of 12 months but notice of termination periods can vary widely. Some factoring companies will not allow termination until after the first 12 months has expired which means that they will then be entitled to charge you the Minimum Annual Fee for the second year even if you give notice straight away. Some factors now offer 6 month agreements.

Trial period - Some factoring companies have a trial period and if their service doesn’t meet expectations within that period you can find an alternative factor.  Make sure that there is no penalty if you are unhappy and wish to change factors.

Reputation and references - The relationship between your factoring company and your customers will be crucial so it is important that you ask the factoring company for references from their clients. Try to speak to clients that they have taken from other factors as they will have a better idea of what can go wrong with factoring relationships.

Personalized service - Ask who will be handling your facility and try to gain some idea of how many different people you may need to deal with. Some factoring companies operate with a single point of contact which many companies prefer.

Export sales - If you export find out how the factoring company handles the credit control. If they use affiliates in the overseas countries, ask how they exercise control over the debts.

Please click on the link to the left to be taken to the website of our partnering company for instant online invoice discounting quotes or if you wish to discuss any matter relating to factoring or invoice discounting with human beings, please contact us directly.