Improve Your Factoring Application with an Executive Summary

Invoice factoring is commonly used by business owners trying to turn their companies around. In these situations, getting financing is essential for the company’s survival. You can improve your chances of approval by including an executive summary with your application. This article discusses the factoring due diligence process and how an executive summary increases your chances of approval. We cover:

  1. Factoring application and due diligence
  2. Why does an executive summary help?
  3. What goes into an executive summary?
  4. Application tips

1. Factoring application and due diligence

Most factoring companies use the following application process. The client speaks to a business development officer, explains their business, and submits their application package. The business development officer reviews the application, writes a summary, and presents it to the underwriting team.

The underwriting team reviews the application package and starts the due diligence process. The due diligence process includes reviewing your customer’s business credit, aging report, and other details. After this review, the factoring company has three potential courses of action. They can issue a proposal, request more information, or decline the transaction.

2. Why use an executive summary?

This process works well in most cases. However, the client seldom speaks to the due diligence team directly. The business development officer acts as the primary communication conduit. They present your company to the underwriting team. This arrangement can put some companies at a disadvantage, especially those with cash flow problems. Your company depends on the sales officer’s ability to present your company correctly.

You can overcome this obstacle if you manage to speak to the due diligence team directly. This opportunity enables you to present your company directly. However, you cannot count on being able to speak with the team. Fortunately, there is a way around this challenge. You can include an executive summary with your application.

An executive summary allows you to present your company directly to the underwriting team. You can use it to explain your challenges and, more importantly, the opportunities. Few prospective factoring clients use an executive summary. By using an executive summary, your application can stand out in a positive way.

3. What goes into an executive summary?

The executive summary enables you to communicate directly with the underwriting team. It should be brief and well-written. Proofread it and use a spellchecker before submitting it. The executive summary should contain the following:

  • Owner background
  • Brief company history
  • Target market
  • Current clients
  • Your billing process
  • Current and expected revenues

4. Some tips

The main function of the executive summary is to present your company in a good light. This communication improves your chances of overcoming objections and getting funded. Use this opportunity to address any company problems and present your view on the business. This effort can help if your company has serious challenges such as:

  • Unpaid payroll taxes
  • Unpaid federal/state taxes
  • Lawsuits
  • Company bankruptcies

Lastly, ensure your application shows your company’s best side and avoid these common mistakes:

  • Hard to read
  • Missing required documentation
  • Missing information
  • Inaccurate information

These mistakes are easily avoided and can delay your approval. They could cause the factor to decline your application if they are serious.

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