When invoice finance factoring is bad for business
Prevent Invoice Financing Problems
Finding the right invoice financing company for your business can be difficult. There are several important factors to consider to find the right match.
First, the financing company must have the same managing philosophy as your business when dealing with customers. Because they will be interacting with your customers and making collections, it's extremely important that they conduct business with the same level of professionalism and customer-centric service.
Worrying about how your customers are being treated is one of the last things you want to do. If your invoice finance company doesn't treat your customers properly, it can cost you dearly, as the relationships you've cultivated are eroded.
You should also consider how your customers will react to another company as an intermediary. You don't want any confusion when the invoice financing company delivers the bill, rather than receiving it directly from your business.
A great way to prevent problems of these types is to use a broker. An impartial broker will facilitate necessary information exchange as they learn about your business and help you decide which invoice financing lender is the best fit.
Both types of invoice financing, factoring and discounting, are best used by companies with over a certain level of revenue. Many lenders require a minimum of £100,000 as adequate collateral to borrow against. Lenders offering lower minimum requirements should be viewed skeptically.
There is a lot more diversity between invoice finance companies than you may think. Because there are so many, thorough research into both brokers and lenders can pay dividends by keeping your customers happy, while solving your cash-flow problems.
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