How to Choose a Factoring Company

November 15, 2023

Choosing the right factoring company for your business is one of the most essential decisions you will make. While it’s not as important as expanding into a new market, the invoice factoring company you work with can mean the difference between a profitable experience or a costly one. This article will discuss how to choose a factoring company and what you should consider.

Why should you work with a factoring company?

Running a business requires that specialists handle different components. However, some company managers have numerous responsibilities due to their limited team and capacity. This is why business owners must know the ins and outs of their company and learn to delegate management tasks.

Working with a factory company can help you reduce your workload and optimize your financial resources. Factoring companies can offer:

  • Seamless funding. Many startups depend on loans to fund their operations. Since loan companies have a rigorous evaluation process, any mistake can cause delayed or denied applications. Invoice factoring companies can receive your loan approvals much sooner since lenders have a reputable company to verify your company’s financing.
  • Diverting assets to your factoring company. Banks request upfront collateral before you can borrow from them. It makes it challenging for business owners who are just starting out. Since building a business is risky, some business owners choose to use personal assets as collateral, which can backfire if a business doesn’t pick up or generate revenue. A factory company is able to take your unpaid accounts receivable and turn them into your company’s collateral.

Things to consider when choosing a NY factoring company

There are several things to consider before you select a NY factoring company. These include:

  • How long the factoring company has been in business. The first thing you should consider when choosing a factoring business is how long it has been in business. The reason is that the company will have more to offer, including experience and references to prove its worth. Working with a stable invoice financing company can help your business grow, but you need to work with a reliable company with a robust track record in finance.
  • Caps on how much you can finance. Some businesses have caps on how much you can finance. Your business may never have to obtain a cap, but if you do, it can deprive you of the capital you need.
  • Cost. Using a factoring company is not free. However, it doesn’t mean that you have to break the bank. The rate the factoring company charges should be a factor you consider before you decide on a company. If an invoice factoring company’s charges are higher than normal, you are likely overpaying.
  • Timeline for funding. When your cash flow is in trouble, you need money immediately. This means the faster you can receive funding, the better off you and your company will be. You’ll want to find a factoring company that can fund you in days, not weeks. You should ideally find someone who can give you financing within 24 hours after the approval process is complete.

Are you interested in partnering with a NY factoring company?

At BP Financing, we make it easier for you to access the cash you’re owed. As one of the premier NY factoring companies, we focus primarily on accounts receivable financing, which means you’ll see your money within the next 24 hours rather than waiting weeks or months. You can learn more about our process online or get in touch to get started today.