Have you ever been in trouble while trying to recover outstanding payments from clients? Well, fret no more! You can now hire the services of one of the top factoring companies who will take care of all payments and make sure your company has no further outstanding account receivables. The amount of money the company charges vary. So here are some of the questions you need to ask them before you finalize on which one to hire.
- Ask them about how they decide on their rate. Because in general, the fees depend on how strong your customers are financially and how good they are in paying you the credited amount.
- Ask them about their advance rate. In general, these range from 75-90%.
- Some factoring companies offer “flat fee rate”. Ask them about all the features and provisions of such a deal, and make sure you understand each and every one of the clauses involved before you come to a decision. While they may sound simple enough, you often end up paying a much higher amount.
- Interrogate them about the terms of the contract. Ask them about the period of the contract, fee for early termination, provisions for automatic renewal if not cancelled in writing, or the notice period required before cancellation.
- Ask them about application fee, credit reporting fees, lock box fees, due diligence fees, minimum monthly volume fees, same day advance fees, wiring fees, upfront advance fees and monitoring fees etc.
- Find out how they calculate their interest charges. Choose the one which you find suitable according to your business type. There are some firms who start charging you extra money in interests as soon an invoice is generated. By that rule, you end up paying a lot more money.
Make an informed decision while choosing the proper factoring company for your business.