Choosing an A/R Financing Company can feel like you’re guessing what’s behind door number three in a game show.
Here are three things that will help you find an A/R funding source you don’t have to worry about. You probably wouldn’t hire an employee without experience, specific skills and a good history, and you shouldn’t expect less from your A/R Company.
1. Time in Business.
Factoring companies are easy to start and hard to execute well. Ask how long the company has been around. How long has their management team and staff been involved in the factoring industry? Factoring operations are not simple- the factor handles the billing, receivables and collections for each of their client companies. If they are inexperienced, this can mean anything from headaches to disaster for your company. On the other hand, an experienced group will make sure your books are clean, your debtors’ credit is good and your cash flow stays in control.
2. Experience with Your Industry.
How many accounts has the Factoring Company handled in your industry? If a company is inexperienced in your industry, they will try to fit your business into the patterns of another industry. While this might not ruin your business, your day-to-day functions run much smoother when your factoring company has ‘been there and done that.’
3. Customer Longevity.
How long do their clients stay and what happens to them when they leave? Do they close their doors or move into traditional funding options? Your company should ultimately benefit from good credit advice and cash flow solutions from an experienced financial manager. The industry average is usually counted in months, but the average is pulled down by less-than-professional A/R groups, so look for a company who measures their client relationships in years, not months. Find out how long their oldest client has been with them. It’s a good indicator of how your experience will be.
Transfac Capital has been funding businesses since 1942, has factored approximately $1.5 Billion in A/R and retains their clients five times longer than the industry average. Call us today to see if we can help your B2B business get funded.