Factoring of Accounts Receivable is a financing option that gives your business the flexibility you need to reach your goals without the hurdles of other alternatives, such as bank loans. If you are considering Factoring for your organization, here are four tips you should keep in mind to make the most of it.
1. Make an Informed Decision
Choosing a Factoring company is an important part of your business strategy, so make sure to gather all the facts you need to make an informed decision.
Ask questions and take your time. Read the material that the different Factors provide and, if possible, arrange an in-person meeting or a telephone conversation with one of their representatives.
These are some previous posts you may find useful as you do your research:
- Invoice Factoring: the Basic Do’s and Don’ts
- Ask These 4 Questions to Find the Right Factoring Company
2. Understand How Your Factor Handles Unpaid Invoices
One of the most important aspects of Factoring of Accounts Receivable is how a factor handles unpaid invoices. There are two basic alternatives:
- Recourse Factoring: Your company must buy back any unpaid invoices that the Factor is unable to collect from your client.
- Non-Recourse Factoring: In this case, the Factor assumes most of the risk of unpaid invoices, protecting your business from any non-payment.
At ACS Factors we are a non-recourse Factoring company. This means that we take the credit risk if your customer cannot pay—our loss, not yours!
3. Determine if Factoring Works for You
Factoring can help most businesses, regardless of their size or industry. However, this option may not work for you if, for example, your business doesn’t receive invoices from clients regularly, or if you have any existing liens on your invoices.
To discover how Factoring can help your specific industry, read our previous post “What Businesses Can Benefit From Factoring?”
4. Get Organized
As a business owner, you probably know that organization is one of the keys to achieving success. Factoring of Accounts Receivable is no exception to this rule.
Before you get started with Factoring, it’s a good idea to review your invoices to identify which clients have outstanding invoices and get a clear picture of their payment history and creditworthiness. Putting in some work at the beginning will benefit your company and ensure that the Factoring process is smooth and simple.
ACS Factors: Advancing the Capital You Need to Move Your Business Forward
At ACS Factors we are here to help you turn your invoices into immediate cash. We are located in Upland, California, and have many clients in the distribution and logistics corridor which includes Ontario, Riverside, Fontana, Jurupa Valley, and Moreno Valley.