by filling out the client profile. This profile will cover basics
such as your company's name and address, the nature of your business,
and information about your customers.
The factor will use the client profile you submit to determine
if your business is suitable for factoring. This process is simply
the factor analyzing the risks versus the rewards, using the information
Remember the factor will attempt to determine the creditworthiness
of your customers independent of their credit history with your
business. The factor wants a broader view of their overall credit
Once submitted, the Client Profile will be accessed by up to
4 factors that can meet your needs. Each factoring company competing
for your business will begin to determine the best rate and terms
they can provide you. They will call you directly to discuss your
business and explain the value added services they offer.
During this initial stage you will also cover basic financial
arrangements with the factor. For instance, what will be the monthly
volume of invoices you want to factor (i.e. how liquid do you
need to be)? What will the advance rate and the discount rate
be? How quickly will the factor issue the advance to you? What
services does the factor provide?
The answers to these questions will vary depending on the financial
strength of your customer(s) and the expected monthly sales volume
to be factored.
In the factoring business, volume is all important. The higher
your volume(the dollar amount of invoices you factor), the more
favorable your rates will be.
Once approved, you can expect to negotiate terms and conditions.
The negotiation process takes several aspects of the deal into
consideration. For instance, if you want to factor $10,000, you
can't expect as good a deal as a company that wants to factor
During the negotiation process, you will become well aware of
what it costs to factor your invoices. Compare the offers you
receive. After you reach an agreement with the factor, the funding
process will begin. The factor conducts due diligence by researching
your customers' credit and any liens placed against your company.
The factor also confirms the legitimacy of each invoice before
advancing cash to you.