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Will You Add? - Tips on Choosing a Factoring Company!
In my youth, many years ago, I worked for a medium size manufacturing company. I was, like all at that age, eager and knew it all. And some still call me a know it all.After two months there, the President asked to speak to me. I did not think he even knew I existed. Sweat time. I was sure I would get the axe and I had no idea why.“I need your help,” he said. I started to become confused and weak kneed. My being speechless, he continued: “We are having serious scheduling problems and I would like you to investigate. A fresh look at the problem may be useful.”“Listen to this” he said, “It is a memo to the Sales Manager from the Production Manager.”He read the memo “John:
Ask about up front fees:
Some factors charge a due diligence fee, this can range from $250.00 to $500.00 dollars, even higher for construction. Stay away from application fees, they are not necessary. A due diligence fee is okay and understandable since the factor does have cost associated with opening an account, however some factors do not even charge any up front fees.
Ask how long they have been in bu
Negotiating with your boss can be a little tricky because you are not on equal footing. Since there is always the chance there could be repercussions for speaking out, an employee usually won’t tell his boss what he is really thinking. Anyway, let’s assume that you want to get a raise or a promotion. Here are some of the rules you can use to negotiate with your boss.1. Focus On The Goal; Don’t be Distracted By Emotions.It is especially important not to let your emotions interfere with a request to your boss. If you are angry because you were passed over for a promotion or did not get the raise you think you deserved, it is not a good idea to immediately go to your boss’s office and de
Each person and business varies so how do you know which factor is the right choice for your company.
Some things you need to know before you choose a factor!
Term Contracts:
Do they require a term contract?
There are pros and cons to a term contract;
Some Cons:
You are not happy with the factor due to the way they service your account.
They may treat your customers poorly, jeopardizing them as your customer.
They may have poor reporting.
You need to make sure they do not have a hefty termination fee, lets say for what ever reason you may need to terminate the relationship, what will it cost you.
Pros:
You may get a better fee structure due to locking in on a term contract
When choosing a factor here are several questions to ask them before you sign up:
Do they bulk your receivables; in other words, when you sell them your receivables, do they release your reserves as each invoice is paid, or do they wait for all the receivables to collect from a given schedule before they release your reserve.
As an example, you sell a factor 100k in receivables on one schedule which consist of 4 different customers at 25k each, 2 of your customers pay the invoice within 30 days and the other 2 pay in 45 and 60 days. That would mean you would have to wait until the last customer pays at 60 days before you get your reserve, this is not good, try to avoid signing up with a factor that does this.
Ask about additional fees, do they have a service charge or any fees on top of the discount. This is not uncommon if you are set up on a prime plus rate, yet it still needs to be accounted for when choosing between factors. You may get some smoke and mirrors from conversations and proposals. When you receive the contract, that will spell it all out, take the time to add up all fees to accurately and compare proposals, the one that seems to be the highest at 1st may not be that far off.
Ask about up front fees:
Some factors charge a due diligence fee, this can range from $250.00 to $500.00 dollars, even higher for construction. Stay away from application fees, they are not necessary. A due diligence fee is okay and understandable since the factor does have cost associated with opening an account, however some factors do not even charge any up front fees.
Ask how long they have been in bus
According to a white paper available on the Turnaround Management Association (TMA) website, signs of a troubled business are (listed in their order):Ineffective management styleOver diversificationWeak financial functionPoor lender relationshipsLack of operating controlsMarket lagExplosive growthPrecarious customer baseFamily vs. business mattersOperating without a business planWith the possible exception of an ineffective management style signs 2 – 9 can be viewed as symptoms or effects of operating without a business plan. No matter how many times it’s said or how tired we are of hearing it
They may treat your customers poorly, jeopardizing them as your customer.
They may have poor reporting.
You need to make sure they do not have a hefty termination fee, lets say for what ever reason you may need to terminate the relationship, what will it cost you.
Pros:
You may get a better fee structure due to locking in on a term contract
When choosing a factor here are several questions to ask them before you sign up:
Do they bulk your receivables; in other words, when you sell them your receivables, do they release your reserves as each invoice is paid, or do they wait for all the receivables to collect from a given schedule before they release your reserve.
As an example, you sell a factor 100k in receivables on one schedule which consist of 4 different customers at 25k each, 2 of your customers pay the invoice within 30 days and the other 2 pay in 45 and 60 days. That would mean you would have to wait until the last customer pays at 60 days before you get your reserve, this is not good, try to avoid signing up with a factor that does this.
Ask about additional fees, do they have a service charge or any fees on top of the discount. This is not uncommon if you are set up on a prime plus rate, yet it still needs to be accounted for when choosing between factors. You may get some smoke and mirrors from conversations and proposals. When you receive the contract, that will spell it all out, take the time to add up all fees to accurately and compare proposals, the one that seems to be the highest at 1st may not be that far off.
Ask about up front fees:
Some factors charge a due diligence fee, this can range from $250.00 to $500.00 dollars, even higher for construction. Stay away from application fees, they are not necessary. A due diligence fee is okay and understandable since the factor does have cost associated with opening an account, however some factors do not even charge any up front fees.
Ask how long they have been in bu
Business Directory or Guide normally come out with printed version (Book) which containing an alphabetical or classified listing of product and services, company name, company address, telephone number, and company advertising.Using Directory, people can find company name and address by searching through product and service name which listed alphabetically. For instance if technician working in an oil refinery plant need to replace some blunt Non-Sparking tools, how would he go about looking for the Non-Sparking Tools?Firstly, he need to open a directory, search for "Tools" classification under 'T' alphabet index. Then under "Tools" Classification, search for "Sparking Tools" Subcateg
As an example, you sell a factor 100k in receivables on one schedule which consist of 4 different customers at 25k each, 2 of your customers pay the invoice within 30 days and the other 2 pay in 45 and 60 days. That would mean you would have to wait until the last customer pays at 60 days before you get your reserve, this is not good, try to avoid signing up with a factor that does this.
Ask about additional fees, do they have a service charge or any fees on top of the discount. This is not uncommon if you are set up on a prime plus rate, yet it still needs to be accounted for when choosing between factors. You may get some smoke and mirrors from conversations and proposals. When you receive the contract, that will spell it all out, take the time to add up all fees to accurately and compare proposals, the one that seems to be the highest at 1st may not be that far off.
Ask about up front fees:
Some factors charge a due diligence fee, this can range from $250.00 to $500.00 dollars, even higher for construction. Stay away from application fees, they are not necessary. A due diligence fee is okay and understandable since the factor does have cost associated with opening an account, however some factors do not even charge any up front fees.
Ask how long they have been in bu
What sort of things should you consider? What do you want your employee to do? Is the expense of an employee, or you going to make more money, or is it going to cost you more in the end? These are some of the questions you are going to have to ask yourself before you decide to add to your workforce.Here are 4 things you should consider before you decide to hire:Cost vs. Profit – Having an employee can certainly increase your production, and even help you make more sales. But, it is important to consider whether an employee – with wages and expenses – is going to warrant the added expense in a growth of profit. If you are in a position where you cannot keep up with the demand for your
Ask about additional fees, do they have a service charge or any fees on top of the discount. This is not uncommon if you are set up on a prime plus rate, yet it still needs to be accounted for when choosing between factors. You may get some smoke and mirrors from conversations and proposals. When you receive the contract, that will spell it all out, take the time to add up all fees to accurately and compare proposals, the one that seems to be the highest at 1st may not be that far off.
Ask about up front fees:
Some factors charge a due diligence fee, this can range from $250.00 to $500.00 dollars, even higher for construction. Stay away from application fees, they are not necessary. A due diligence fee is okay and understandable since the factor does have cost associated with opening an account, however some factors do not even charge any up front fees.
Ask how long they have been in bu
It is important to have label printers that are portable and hence can be carried from one place to another so that labeling can be done on the spot. There are many portable printers available today that have a battery inside that is rechargeable and allows the printer to work for hours before a recharge is necessary. These handheld printers are lightweight and compact and can be easily carried. A keyboard is integrated with the printer to allow the user to enter the details to be printed.Labeling machines that can be carried anywhere?from an office to a shop floor?are also available. These are rugged, heavy-duty industrial label printer types that have a wide variety of color label tapes. A
Ask about up front fees:
Some factors charge a due diligence fee, this can range from $250.00 to $500.00 dollars, even higher for construction. Stay away from application fees, they are not necessary. A due diligence fee is okay and understandable since the factor does have cost associated with opening an account, however some factors do not even charge any up front fees.
Ask how long they have been in business, some factors are larger than others and you want to make sure they are capable of handling your companys growth.
Some factors are small and do not have adequate funding backing them, it has been known of some factors running out of money and were not able to fund their clients.
Working with consultants / brokers
You certainly do not need a broker to get set up with a factor, but it can be to your best advantage. Here are some pros and cons.
Cons:
The broker has not been in business very long and does not really understand factoring to it fullest yet themselves, ask them how long they have been in business and how much business they have done.
The training they received was not adequate and they do not know how to pre qualify and may end up wasting your time filling out an application and sending in documentation when certain questions could have been ask that may point out obvious reasons that would prohibit you from qualifying.
They over shop deals; some brokers will send out your application to as many factors as they can., this can be a bad reflection on you. Just like having too many inquiries on your credit is a red flag to banks, when a factor sees your application from several different brokers it may raise a red flag. Keep this in mind, shopping rates to a certain point is healthy, however rates only go so low, choosing the right factor sometimes means the rate is a touch higher. Customer service is very important.
Some brokers are part time, which means they are not established.
Pros:
Nothing can be better than a in depth consultation, a seasoned consultant / broker can asked you questions and explain things in a way you may not have thought, plus when you are dealing directly with a factor, you are not getting a third person perspective.
An experienced consultant / broker should be dealing with trustworthy and reputable factors. Plus they make sure factoring is the right financial choice for your company.
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