How to best use your new Factor.
Often as a company starts off with a Factor they do not know what to do to get the most benefit from this new relationship. Here are some simple tips.
Make buying your invoices easy for the Factor. You have a Factor because you want easy and predictable access to cash. The best way to assure this is to provide all of the information they need to purchase an invoice when it is submitted. This speeds the process and aids predictability.
Control your cost. Factors charge fees based on time. You pay more the longer an invoice is outstanding. With flexibility you are better off selling an invoice which pays faster than one that pays slower. If you do sell an invoice with longer, but approved, terms have the factor process the invoice at the normal time but wait to purchase it until funds are needed. This minimizes your cost.
Fully use their services. Money is only one of the benefits provided by a Factor. Labor and knowledge are others.
Credit. Check the credit of new customers prior to a sale. Follow credit guidelines. Have invoices purchased on a non-recourse basis when possible.
Collections. Follow your aging to make sure invoices are paid as expected. If late, check with the Factor for information and when needed contact your customer directly. Work to make sure payments are directed properly. When customer disputes arise be proactive but work in concert with your Factor.
Information. Use their technical capabilities when processing and transferring information. Reduce duplication when possible.
Communicate. A good financing relationship leads to a Win Win result for the Factor and its client. Remember, both parties want the same thing which is the easy and predictable collection of sales receipts.