Having transitioned into the new year, 2014 will undoubtedly bring many challenges for small business owners. One of these challenges is finding the right sources of capital to fund their business. A key to running any business is to always know where you are financially. All too often company finances go overlooked until too late. Don’t wait to the last minute to find the right financing tool.
There is an abundance of financing options for small businesses, factoring being one that is making a resurgence. Factoring companies can vary dramatically in what they offer so make sure to know the facts before you commit.
When looking for a factoring relationship remember the “Who, What and When”.
Who is the best factoring company for my business:
Look for the number of years a factoring company has been in business. Factoring companies with more than 10 years in the business generally offer a good program. Companies with 20 plus years are doing something right and it indicates they likely have a very solid reputation. Look for a factoring company with a tenured management team and sales force. Get to know the people you will be working with because it DOES make a difference. Relationships are key, especially when dealing with what can be stressful financial matters.
What factoring program is right for my business:
Most factoring companies have similar programs but it’s how they work with the business owner that matters. Many factoring companies have industry expertise in areas such as trucking, medical and staffing that could be beneficial for the business owner. When selecting a factoring partner focus on companies familiar with what you do.
When should you work with a factoring company:
If slow cash flow is preventing you from meeting you obligations on time it may be time to factor. Most companies experience slow paying customers from time-to-time but if it has become the norm, factoring could be the answer. Factoring is usually a short-term resolution for businesses, anywhere from one year to eighteen months. Most businesses usually become eligible for more traditional financing after they have been a factoring customer.