Factoring Blog

Factoring Application Success Strategies

application success strategiesThis article assumes that you have started the process of interviewing factors and that you are ready to chose among the best candidates for your company. Selecting the right factors to apply with is one of the most important parts of a successful application strategy.

We’re going to discuss some simple tricks that will help improve your application and increase the chances of getting funded.  By following these simple strategies, you will be able to submit an application that looks very professional, is complete, and will create a positive impression with the factor.

This article is the counterpart of a another article – common factoring application mistakes to avoid.

Application tips

Most of these tips will look really simple. However, 90% of applications don’t follow them. This often leads to funding delays, possible denials or even higher rates. You can set your application apart by doing the following:

  • Use clear writing: If the factor provides a form that can be filled out online or using a computer – use it. It will save you a lot of hassles. But if they only provide applications that can be filled out by hand, use clear and easy to understand handwriting. Take your time filling it out. Don’t make the mistake of submitting an application that look sloppy and unprofessional, which creates a negative image.
  • Fill out the whole application: Filling out every section in the application is very important if you want it to be processed quickly.  If the finance company is asking for something that you do not have, mention it on your application. Leaving sections of the application blank (unless they don’t apply to you) is usually seen as unprofessional and could be interpreted as trying to hide information.
  • Include all documents:  Like the previous point, be sure to include all documentation that the application is requesting. If there is a document that you cannot provide, be sure to mention it so that the factor can help you come up with an alternative. Failing to include all documents (or explanations) is likely to be seen as unprofessional and have a negative impact.
  • Be honest: This is the most important point. A number of prospects look for this type of financing because they have cash flow problems. Many of them got into trouble simply by growing too fast. This means that your financials may not look as good as you would like them to look. It may also mean that your company’s record has some blemishes. Your best bet is to disclose these points up front so that the factoring company can help you find the right solution. Purposely avoiding to disclose this information when it’s asked will likely fail – most factoring companies do public record searches and compare those results with what your application discloses.
  • Include a one-page write up: Aside from submitting a completed application, you should also consider including a one-page write up that summarizes your company’s situation, customers, challenges, and more importantly opportunities. This executive summary will help the underwriting department get a better sense for your company directly from you. Most underwriting departments rely on what credit managers and salespeople tell them. This little trick allows you to make sure that they hear your story – from you. It’s best if this document is short and to the point. It should never be beyond a single page. You should consider having a business associate read it and provide you with feedback before you submit it.
  • Submit a full application at once: Most prospect make the mistake of submitting their application in piecemeal parts and on different days. This makes the job of the underwriting team more difficult because they can only do a bit of due diligence at a time. It also delays the whole process. By gathering all the information first and then submitting a complete application, you will be doing something that makes the factor’s life easier. And, it will reflect positively on your company by presenting a more professional image.

Why do these tips work?

These tips work because they help you present a professional image to the factoring company. This will separate you from the majority of applications which often have some problems. Because of this, you will have a higher chance of getting a quick answer and possibly give you some leverage to negotiate better rates. Why is this? Factors like working with professional clients because they perceive them to be a lower funding risk.

Disclaimer: This article is provided for informational purposes only and should not be considered advise. Please get professional advise if you are applying for factoring.

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