If your business is in a cash bind, it’s natural to start looking at factoring receivables companies. They can give you cash immediately, so that you don’t have to wait for your clients to pay you. Of course as with anything else in life, all factoring receivables companies are not the same. So how do you select one that won’t make your financial situation worse? Here are five things to look for:
• First, do research about every company before you sign on the dotted line. If there are a lot of unsatisfied customers, then it shouldn’t be too difficult to discover. Look for unbiased sites where customers are free to share their opinion about the company to see what it may be like working with them.
• Look for a company that has experience within your industry. Some factoring receivables companies focus their efforts in just one or two industries, while others have a much broader experience. Make sure that they know what your industry is like, so that you don’t have to explain things to them throughout the factoring process.
• Get quotes from several different companies before making your final selection. Some companies may only give you a small percentage of your invoices’ face value up front, while others will give you much higher percentages. A quality company should forward you, up to 90 percent of the face value of your invoices, so that there’s no delay in getting your business back on track.
• Try to gauge the company’s customer service department. These are the people you’re going to work the most closely with, so it’s important to find a company that practices good customer service. Make sure that you can understand their representatives and that you don’t have to keep asking them to repeat themselves because they barely speak your language. Also try to get a feel for how they handle their customer interactions. Are they professional in each encounter?
• Don’t forget to check into the company’s debt collection procedures. If you sell your invoices to the company, they could interact with your customers. Some companies are certainly more discrete than others. You don’t want this company to give your business a bad name because it practices unethical collection practices.
There are numerous factoring receivables companies available, so it’s important to know what to look for before you sign up with them. After all, you’re not only doing business with them, but allowing your customers to do business with them as well, in an indirect way. The things this company does will reflect on your business if your customers make the connection to you.
In addition, the factoring process can be rather complex, so it’s important that you have a company with knowledgeable people who know what they are doing and will treat you with professionalism and fairness.
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