Factoring Companies - Ask About Hiddens Fees |
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By: Troy Degarnham Posted: 2007-09-20 10:19:38 |
| There are literally hundreds of factoring companies to choose from in the modern economy. Each of these companies presents its own set of benefits and advantages to using their company. However, there are a few tips and tricks that can be learned before setting out to find financing companies that will best suit individual needs.The first aspect to consider when choosing appropriate factoring companies is that there are no hidden fees. Many companies promise great return only to discover that there are invoice fees, charge back fees and other fees that the financing companies are not upfront about. Ask and inquire about hidden fees such as phone calls or any other fees that may not have been mentioned in the company literature. Most reputable factoring companies incorporate the fees for invoices, and other expenses in the percentage that they offer to buy invoices.That effectively introduces the percentage of which many highly regarded financing companies offer. Be cautious of factoring companies that offer a very high advance rate on the factoring invoices. These are the companies that typically have hidden fees so that when it comes time to get the actual finances, the rate becomes much lower. Generally, a good solid rate for financing companies is around 80%. It may seem unattractive compared to a similar company offering 90% but after hidden fees the percentage usually falls much below 80%. Factoring companies that offer around 80% advance for factoring invoices usually don't have hidden fees. If they offer 80%, that translates to an actual 80% advance on all factoring invoices that are presented.Keep in mind that financing companies are essentially taking over the business's accounts receivables. With that said, factoring companies that offer a professional collections department would be an essential asset. The benefits to finding financing companies that offer this service characteristically speed up the process inherently. The manpower is available to collect the debts from the factored invoices in a professional and timely manner. It also avoids the much dreaded charge back fees when the invoices are not paid after a certain period of time allotted in the initial factoring contract.Many factoring companies do not assume risk against those debtors that may or may not pay their invoice. A solid company with a reputable factoring history will assume the credit risk associated with invoice factoring. That means that if the client doesn't pay, the financing companies take that risk instead of the individual business, which is a huge relief for any prospering business.Factoring companies should be selected following basic ground rules to ensure a successful factoring experience. Select the financing companies according to the history that they have. Any good company will have a proven track record to accompany their claims and should be easily accessible. Factoring companies that understand the needs of any growing business is key to factoring success.Troy Degarnham is the author and webmaster of http://www.accounts-receivable-financing.info an informative website about Accounts Receivable Factoring.Extensive help and tips on factoring companies, assets, small business, medical factoring, non recourse and other factoring financial services. |
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