How to Choose a Large, Full-Service Factoring Companies
If you’re a small business owner, your need for cash to meet working capital requirements is typically top-of-mind. When you use factoring to meet those requirements, you should consider the benefits of working with large, full-service factoring companies as opposed to a smaller, more limited factor.
The evidence is clear that larger factoring firms, with greater financial resources and higher credit standing, typically provide both a broader array of services for clients as well as outstanding customer service.
What Large Factoring Companies Provide
A large, full-service factoring firm will do a full-scale credit history on your prospective customer companies, and will maintain ongoing credit monitoring of your client. It will provide accounts receivable financing and invoice factoring. It will provide non-recourse financing with credit protection, purchase order and import financing – even government contract financing. A large factor will also have expertise and experience working with clients in a wide range of industries.
They will also be able to provide funding to startups whose credit is currently weak but whose prospects are very strong. Large factors also can provide funding to firms that have a concentrated client list – and even deal with companies that have IRS tax issues.
Factoring Services in a Nutshell
One thing is certain – the large factoring firm you select will be able to provide you with everything you need to meet your working capital requirements. Here’s how it works: Many of your customers may be stretching out their invoice payments for 60 to 90 days or longer, leaving you with a cash shortfall. With factoring, you submit your receivables to the factoring company, and get the cash you need almost immediately. The factor will advance you up tp 90% of the value of the receivables. When your customer pays down their invoice, the factor will remit the balance to you, less a small percentage fee for their services.
Selecting the Right Factoring Firm
When seeking to partner with a large factoring firm, you need to keep one thing uppermost in your mind: As in any business, all large factoring companies are not alike, nor do they all provide the highest degree of service or value. Therefore, you need to be careful about which factor to work with.
You need to conduct extensive due diligence to determine which candidate firm provides the best value over the longer term. For example, do they have a long track record of successfully working with firms in your industry? Do they have significant expertise in your industry? Can they provide you with solid references who will vouch for their capabilities and good customer service?
Paragon Financial stands out among larger factoring companies. For more than two decades, we have combined a strong entrepreneurial management team with outstanding customer service to become an acknowledged leader in the invoice factoring and purchase order funding industry. From manufacturers and distribution companies, and from staffing companies to government contractors, Paragon has helped more than 2000 business owners to grow their companies while helping to eliminate any cash flow shortfalls or credit issues.
So, conduct careful due diligence before you decide on which large factoring firm is right for you. On that basis, we’re confident that, after your analysis, Paragon Financial will stand out in your minds as a go-to funding firm.