Do Your H0mweowrk and READ read the documents
So, I just returned from a sales meeting with Factors Western in Calgary.
One of area of our discussion centred around what our customers and potential customers are looking for in a factoring company in todays economy since the great meltdown of the economy.
We all agreed that our customers are all looking for a “deal. This is, in part because some of the smaller players in this industry have disappeared, many because they have made bad risk decisions operating their business and it’s easy to lose not only your shirt in this business but maybe even the rest of your apparel and more.
And to get business, some factoring companies may be offering rates that prospective customers find hard to resist. But, the devil is in the details folks. Beware the bearer of easy money at a next to nothing cost.
For example, at our meeting, someone spoke of how a competitor signs up customers with very low rates, provided the customer agrees to factor a minimum dollar value of invoices monthly.
Everything goes smoothly for a few months, then, BAM. The Factor starts to refuse to approve invoices from some of the companies the customer has submitted.
So now the customers’ cash flow is impacted much to the customer’s dismay, because they have now breached the terms of their contract that says they must factor a minimum each month to get that real low rate they thought they had signed up for which now balloons to the top charged rate.
Other issues to consider when you are choosing a factoring company are the extra fees some charge. For example, a fee charged for each invoice processed or a fee for each collection call. For invoices that are not collected within the first 30 days some charge a full 10, 15 or 30 days’ interest rate on top of the fee.
So, when you speak with a factoring company, ensure that they tell you about all the fees they charge. And read the paperwork you are about to sign, before you sign it. I insist all my customers do just that so there isn’t any misunderstanding over the life of the business arrangement.
In addition to Ken McLean’s Business Blog, Ken is the BC Regional Manager for Factors Western and would like to hear from you to discuss your business’ cash flow needs, confidentially and without obligation.
CALL KEN MCLEAN: 1-888-651-0004 or by E-Mail: firstname.lastname@example.org