Successful users of invoice factoring take the time to check out the credentials, the business practices and personal ethics of their potential factoring partner. Since you are entering into a three-party agreement that involves you, your customers and the factoring company, taking enough time to carry out the appropriate “due diligence” is critical. Don’t be shy about asking for customer references and then be sure to speak to three or four of the factor’s customers. Criteria and fees can vary considerable, so total disclosure is the key to a successful factor relationship.
When comparing cash-flow alternatives for your business, it is imperative to weigh the pros and cons of each option. The final decision will have a dramatic impact on your bottom-line and could mean the difference between “Sink or Swim”. Whatever your choice, be knowledgeable, perform your due diligence and only choose a reputable firm with a proven track record.