Factoring, what is this financial tool you are looking into that will hopefully fuel your business with the capital it needs to prosper? Each person and business is different, so how do you know which factor is the right choice for your company.

Some things you need to know before you choose a factor!

Term Contracts!

Do they require a term contract?
There are pros and cons to a term contract:

Some Cons:


When choosing a factor here are several questions to ask them before you sign up:

As an example, you sell a factor 100k in receivables on one schedule which consist of four different customers at 25k each, two of your customers pay the invoice within 30 days and the other two pay in 45 and 60 days. That would mean you would have to wait until the last customer pays at 60 days before you get your reserve, this is not good, try to avoid signing up with a factor that does this.

Ask about up front fees.

Working with consultants / brokers

You certainly do not need a broker to get set up with a factor, but it can be to your best advantage. Here are some pros and cons:



So as you can see, using a Consultant / Broker is to your advantage, either way you are the one that needs to be satisfied.

Thanks for reading!

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