7 Reasons It Might Be Time To Switch Your Factoring Company

February 2, 2016

Are you currently factoring your accounts receivables and wondering if it is time to switch to a new factoring company? Here are seven reasons it might be time.

1. Poor Customer Service From Your Factoring Company

Not only do you want quality customer service from your factoring company, but you want it for your clients as well. Your factoring company deals with both you and your clients. That is why customer service should be one of the top priorities when it comes to your factoring company. Your customers talk with your factoring company on a regular basis . If your customers are receiving poor customer service, it could be a reflection on you. And depending on how bad the service is, they might choose not to work with you anymore, causing you to lose future business.

2. High Rate

Are you missing out on a big percentage of your accounts receivables because your factoring company is charging a high rate? If so, it might be time to switch.  According to Entreprenuer.com, the average factoring rate is between 2 and 6 percent. Scale Funding’s factoring rate is volume-driven and customized to fit your needs. Rates start as low as a half of a percent.

3. Low Advance Rate

When you sell your invoices to your factoring company, what percentage do you receive initially? Is it 70, 80 or 90 percent? It is a good idea to check with other factoring companies to see what they can offer you.

4. Funding Takes Too Long

Are you not receiving the cash you need soon enough? The reason you choose a factoring company is so you have the cash you need as soon as possible. If your factoring company can’t provide you with that, it might be time to switch. Scale Funding can provide you with same-day cash on your invoices. Money can be transferred to you via wire, ACH or fuel cards. We recommend ACH transfers because they are more reliable, less expensive and ensure timely receipt of funds.

5. Hidden Fees

Are there hidden fees that you discovered after you started factoring? Some factoring companies will charge extra for credit checks and collection services on your debtors. Be sure to also look if there are introductory rates and administration fees. These fees can add up quickly, and can make the amount of cash you receive on your invoices be less than you initially thought.

6. No Flexibility

Do you want to receive funds from your invoices, no-hassle ACH wire transfers or perks like fuel cards? Maybe you want a combination of all three? Flexibility is important when it comes to how you want to receive the funds from your invoices.

7. No Added Services From Your Factoring Company

Does your factoring company offer other services at no additional charge? One of the benefits of factoring with Scale Funding is that we provide additional services at no extra cost to you. Listed below are a few:

• A/R Management: You will be provided a dedicated relationship manager who is experienced in working with growing companies. A/R management includes integration with billing software, invoice handling, image archiving, payment posting, 24/7 account reporting and a secure online system.
• Collections: Scale Funding’s collection services are designed to anticipate billing issues in a professional and courteous manner to get you paid.
• Credit Analysis and Risk Assessment: We will look at the payment history, financial records, operating history, third-party credit reports and banking relations with your prospective customers to help ensure you will get paid on the invoices.
• Fuel Cards: If you are in the trucking industry and are running three or more trucks, Scale Funding offers clients fuel cards and discounts. The fuel card is accepted at the leading truck and fuel stops.
• Treasury: Scale Funding offers you flexibility in terms of how you want funds from the invoices you are submitting. Rather than locking you into a single method, we can provide cash from your invoices in three ways or a combination; ACH, wire or fuel cards.

If you are thinking about switching factoring companies because of one or more of the above reasons, here are seven questions you should also consider before making the switch. And if you have any additional questions, please contact our Scale Funding financial experts or call 800-707-4845.