There is one common thing among all factoring financing prospects – they all need their money quickly. They almost always ask their company, how quickly can you move? How quickly can you get us funded? While there is widespread belief (many times justified!) that financial institutions move slowly. Most factoring companies move very quickly. Actually, we can move as quickly as our prospect can, provided they supply all the information we need to do our job in a timely fashion.
Why factoring applications stall?
Having said that, not all applications move quickly. Some tend to plod along and can take days on end to get funded. In almost all cases the reason for this is that the prospect could not provide all the needed information quickly. This is why it’s important to have your records in order before starting the application process. This way, the application can move swiftly to funding.
Each factoring company has their own list of documents. However, most will require that you submit:
- Application (provided by the factoring company)
- Invoice Aging Report (A/R Aging)
- Certificate of Incorporation or LLC Operating Agreement
- List of customers you wish to factor
- Latest IRS 941 (if you have employees)
Larger and more complex opportunities will also require
- Income Statement
- Balance Sheet
- Tax statements
Other reasons for delays
There are some circumstances that could delay funding your company that are outside your control though. They don’t happen that often, but should be kept in mind. The most common are:
- Underwriting concerns (usually, the factoring company needs to do further diligence)
- Notification delays (where your customers delay acknowledging the notice of assignment)
Overcoming delays. Getting funded quickly
There is only one way to overcome delays and get your funding quickly. Be prepared and organized. Be sure you submit a completed factoring application, with all the information that the factor request. Also, ask the factor what are the steps that need to be completed prior to funding and try to move those along, where possible.