Selecting the best factoring company for your business can be daunting, and many business owners approach the process haphazardly: they search the Internet, pick the top four or five companies from the listings, and then seek proposals from all of them. In the end, this process consumes a lot of time and does not always yield the best results. In our view, you’re better off using a methodical approach, as it is simpler, takes less time, and often leads to better results.
Here are the steps.
Determine if factoring is the right solution for you
Although it may sound obvious, a number of companies that apply for factoring can’t actually qualify for the program or won’t benefit from it. Your first step should be to determine if factoring financing is right for you. Research factoring until you understand it. We have numerous articles about this program in the resource center and a comprehensive frequently asked questions section.
In summary, factoring helps companies that have cash flow problems because they can’t afford to wait up to 60 days to get their invoices paid. If you have this problem, financing your invoices will most likely help you. Otherwise, consider alternative solutions.
Find and interview the factoring companies
Once you have determined that this program is right for you, find and evaluate factoring companies by searching the Internet, asking your accountant, asking colleagues, or all of the above. Once you have selected a few candidates, call them for interviews. This step is very important. Although most factors portray themselves as generalists who can work in any industry, many of them actually specialize in certain industries. Speak to them to make sure that they are knowledgeable of your industry. Also, they should be comfortable with companies of your size.
The next step is to submit the applications. Select the top two companies that you spoke with and submit applications. Although the application process is relatively simple, it still takes time and resources to complete. Working with one or two companies at a time is usually the best strategy. Be careful about working with more than two companies, as the process may become too cumbersome and present major time challenges.
Collect all the materials that the factors are requesting and submit full application packages. A mistake that companies commonly make is submitting partial applications and omitting critical information. More often than not, this mistake leads to the application being rejected.
Examine proposals and make selection
If all goes well, the factors you selected should provide you with proposals. Now is the time to review the proposals and select which is the best factoring company for you. Consider a number of variables before making your selection, including:
- Financial terms
- Length of time in business
- Experience with your industry
- Personal preferences
Province specific information
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We are a leading factoring company in Canada and can provide you with competitive terms. For information, get an online quote or call (877) 300 3258.