Checklist to compare invoice finance companies, blue pencil on white paper

10 Questions you must ask before you Choose an Invoice Factoring Company

Posted: 26th February 2016
Invoice Factoring has become an established and trusted financial tool in the UK in managing business’s working capital requirements.
  
There are numerous invoice factoring companies in the UK all vying for your business, but some of these will suit you more than others. Below are a list of questions to ask yourself and the factoring company to help you decide which is the right partner for you and your business. 

 

What you want

What to ask

1

I want to deal with an established and quality company

How long have you been trading? Can I see your latest accounts?

2

I want an Invoice Factoring company that understands my business

What other clients do you have in my industry?  Can I speak to them for a reference?

3

I want quick decisions

Can I talk directly to the decision makers in the business (the directors)? 

4

I want you to collect my invoices efficiently

What is your record in collecting debts quickly and efficiently? (tip: ask about the their average debt turn)

5

I don’t want my customers harassed

Can I exclude certain customers if I do not want them chased?  Can I change your collection procedures?

6

I want a personal contact with my credit controller

Can you tell me the name of the person that will be chasing my customers?  Can I speak to them before I sign up? (tip: ask the credit controller the above questions, not the sales person)

7

I don’t want any add-on fees

Can you give me a list of any additional fees that you may charge?

8

I don’t want any surprise charges

Do you charge minimums or renewal fees?

9

I don’t want too many restrictions

What happens if a customer goes over the credit limit or the concentration limit?  Can you tell me what my funding availability will be on my current sales ledger?  (tip:  make sure you ask this one, it’s important)

10

I want to try it out 

Do you offer a trial period?

 
It is vital that you understand in advance the structure and costs of the service that you will receive from your invoice factoring company: Can they offer you a flexible solution? Are their fees easy to understand? Do they include ‘add-on’ charges?

It’s always really helpful to speak to a few clients who currently use the invoice factoring/discounting company you are considering; to learn what their experience has been, from how easy it was to set up, to their day-to-day experience of the people they deal with.

It is important to trust the invoice finance company you choose, so you can leave them to do what they do best, which in turn will let you concentrate on growing and making your business a success.

If you would like to ask us any of these questions to see if we make the right factoring company for you, or to learn more please call our friendly team on 01908 268888 and we will be more than happy to help.