As a small business owner, finding the right choice in all the accounts receivables companies out there can be more of a challenge than with a large company. However, by keeping 3 important considerations in mind, it is possible to find the right factoring company that has the expertise, experience and customer service that is the right match for your small business.
Ability to Work With Your Small Business
First, never assume that small business means the same thing to all accounts receivables companies. If your business is a startup or if you are truly a small company with just a handful of employees, it is important to find a factor that understands the small business model and has the flexibility and responsiveness to meet your needs rather than having your small business meet a large factoring service’s model.
Fees, Minimums, and Charges
One of the biggest differences in accounts receivables companies is the way fees, charges and minimums are handled. Large factoring services typically require minimum volume amounts of invoices per month, or they assess a penalty fee.
Additionally, some factors charge for all their services including for applications, due diligence, setup and termination of the account. As a small business look for a factor that has no minimum volume requirements and no additional fees or costs for any of the services they offer.
Industry Experience
Finally, ask specifically if the factor has experience in working in the specific industry. Understanding how typical billing practices work, the terminology used in the industry, as well as the major customers you are working with, will help them be more effective in managing the accounts.
Always take the time to talk to a small business factor. Find out the details of their services, the costs, and fees and if you will have the ability to speak with the decision makers in the factoring service if and when you need help or have questions about your account.
