Factoring Companies: anyone use them? What rates and terms?

Well I have no idea what it is or what they do...

 

Okay, here goes: factoring is a way to improve cash flow. In a nutshell, it involves the sale of your invoices to a factoring company in exchange for 70%+ of the invoice value immediately plus the balance less adjustments when the invoice is paid. You can use the initial advance to pay for your operating expenses (gas, salaries, leases, etc.) and keep your company going and growing. Factoring is a form of leverage, like the mortgage on your house. If used properly, it can be a useful tool. If not, it can make things tougher for a struggling company.

Full disclosure: I own a factoring company.

Many consider factoring to be expensive and have had bad experiences with it. That said, there are many reputable factors around on both sides of the border that offer great service at reasonable rates. True, it is more expensive than some forms of financing, but nearly all of those require the borrower to have collateral, good credit and great financials. If you can get those loans, you would be crazy not to consider them. For those who don't qualify, there aren't a ton of options, particularly for start-ups. The reason factoring works is that factors rely first and foremost on the creditworthiness of your customers, so even if you haven't been around for long or don't have perfect credit, you can still be approved for factoring.

Best advice: ask around for references. Make sure you compare advance rates, recourse versus non-recourse, discount rates, chargeback policy, set-up fees, terms, etc. DO NOT ALWAYS GO FOR THE LOWEST RATE!

Best of luck to all.

 

I'm new and started with factoring called FINANCIAL CARRIER SERVICES OUT OF NORTH CAROLINA not that they lie on everything but that they are the WORST costumer service ever once you hooked with them you stuck and need to pay BIG BUCKS$$$$$ to get release letter from them I mean it big $ and if any one comes around FINANCIAL CARRIER SERVICES OUT OF NORTH CAROLINA stay away!! Far way I swear they are very very bad news now that I do all invoices my self I'm 100% better and growing day by day 3 trucks so far