You may know exactly what your company is looking for in a factoring company. You just may not know how to locate one that has all of the attributes that you are looking for. Once you have decided that you need factoring, also known as invoice factoring, accounts receivable financing, or purchase order financing, then there are a number of ways to find a factoring company. Some of the best ways include working with a broker, networking with other companies, and using the internet. We will discuss each of these below.
1. Using a broker: A broker can help you find a factor that best suits your particular company and industry. This is very important. It is generally best to work with a broker that specializes in whatever industry your company is in. This will ensure that they understand relevant lingo and processes. it is important that the broker be reputable, has experience and is respected within the industry.
One great thing about using a broker is that they will do most of the background work, making the process much easier and less time consuming for your company. However, because ultimately your company is responsible for all business partnerships and the consequences of those partnerships, it is important to perform their own due diligence even when working with a broker.
2. Professional References: Individuals in certain professions may be able to provide leads for companies looking for a factor. These might include lawyers, CPAs and other people who may work with or come in contact with factors. A referral from a trusted source can be gold and immensely valuable.
3. The Internet: The Internet can be a tremendous resource. There are many factoring companies advertising their services online. Finding these companies online isn’t the problem, figuring out which ones are good, is the hard part. Knowing how to research a factor and to ask the right questions can help your company determine if a particular factor is worth starting a dialogue with.
As a general rule, it is best to go with a factoring company that is established and in every instance, reputable. It is important to work with companies that have been in business at least 10 years and are recognized within the factoring industry.
To summarize, there are a number of ways to find a factoring company. Using a broker is one pretty popular way: a broker can in fact do a lot of grunt work such as finding potential factors and researching them. Professional references may be a great way to find a factor, as long as the references are made from a reliable source. Lastly, the internet can be an excellent way to gain knowledge about factoring, invoice funding, po financing, accounts receivable factoring, and can really help you in finding the right factoring company.