Factoring Blog - Common Questions articles

Should You Factor Customers With Collection Problems?

The short answer is – no. It’s not uncommon for companies to want to factor their problem customer accounts. The obvious logic is that if you can shift the credit risk to another business – why not do it?  The fact of the matter is that factoring companies are good at analyzing credit and they would probably […]

Invoice Factoring – What Are Invoice Verifications?

In a conventional invoice factoring transaction, the factoring company buys your invoices for an upfront payment. Now, when someone buys a tangible good (such as a home, a car or groceries) one can look at the goods before purchase to determine whether they are in good condition – or not. Basically, the goods are tangible. On the other […]

Why a Federal Tax Lien (FTL) Affects Your Ability to get Factoring

It’s not unusual for companies that have tax problems to also need business financing to help cover operating expenses. This makes sense since most companies that have tax problems also have cash flow problems. Many business owners understand how their tax problems may prevent them from getting a business loan or line of credit. They […]

Invoice Disputes and Factoring

Here is a scenario that unfortunately is fairly common in the industry. A client submits an invoice to be factored by the finance company, who then advances funds against it. Thirty days later, the customer tells the factor that they will not pay for the invoice because the work/product did not meet their requirements. In […]

How an Invoice Factoring Transaction Is Structured

Invoice factoring has been gaining popularity as a tool that can be used to finance companies that have cash flow problems due to slow paying clients.  This happens because most commercial sales are done on credit terms – this means that you have to offer your customers up to 60 days to pay an invoice. […]

What Is a Factoring Notice of Assignment?

Customers often ask if their factoring company will have to contact their customers. The short answer is yes – factoring companies will have to contact your customers as part of managing your account. Although few transactions require intensive contact, the transaction is not transparent to them. The first point of contact with your customer  is through a letter called a Notice […]

What is Full Advance Factoring?

This post will explain the concept of full advance factoring. Most transactions are structured as a purchase of an invoice that is paid in two disbursements. The first disbursement is called the advance and tends to average 80%. The remaining 20% is held as a reserve and advanced as a second disbursement (less a fee) […]

How to Check Your Commercial Customer’s Credit

We are always surprised when a small business owner tells us that they sell their products to services to other companies on 30 days terms but have never bothered to check client’s commercial credit.  This is often a recipe for financial disaster. Although there are strict rules as to who can check a consumer’s (i.e. a person) […]

What is Spot Factoring?

Most factoring companies provide financing to clients on a regular basis – meaning they finance client  invoices as they are generated and as funds are needed. However, there are some clients that request factoring for a single invoice – a one time shot. Or, they want to finance a single invoice from time to time. […]

What is Selective Factoring?

Most conventional factoring plans require that you factor all the invoices from a particular customer. Some factoring companies go as far as requiring that you factor all the invoices from all your customers. These types of factoring solutions do not address the needs of companies that only need to improve their cash flow at certain […]

Will a Factoring Company Contact My Clients?

The short answer is yes – if you want to factor invoices from a particular client, the factoring company will have to contact your client. Although each company has it’s own procedures and requirements, most clients are contacted for two reasons – to inform them where to send payments and to verify invoices. The Notice […]

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