How Factoring Companies Talk with Your Customers
Once a company has decided that factoring can help them meet their working capital needs, a common concern is whether factoring will hurt the company’s relationship with its customers. Collecting on invoices can be a touchy subject and you need to make sure that you are partnering with a factoring company that you trust will treat your customers as well as you would. Here are three items to consider:
Thankfully invoice factoring is a potential solution to help you get those invoices paid faster so that you can make payroll and keep your employees happy. Here are three items to consider as you decide whether factoring is a solution for your staffing company:
- Check What Your Factoring Companies Collection Procedures Are. Before entering a factoring relationship it is important to ask the factoring company how they plan to interact with your customers. In today’s world, many factoring companies can utilize client portals and/or being copied on emails to make the invoice verification process as seamless as possible. Also check whether your factoring company prefers to call the customers by phone or use email. A phone call is often better received since the tone of emails is often read in the most negative light.
- Make Sure You Trust Your Factoring Company. At the end of the day, your factoring company becomes an extension of your company. If you partner with a trusted factoring company, this takes the work of following up on invoices off your plate so you can focus on growing your company. If you choose a factoring company without a good reputation, they could harm your relationship with your customers. As you interact with the factoring company you are considering, ask whether you would feel comfortable having them call you to follow up on an invoice or if you could see them acting in an unprofessional way.
- Factoring Doesn’t Make You Look Weak. There is a common misconception that your customers will view you as being in financial distress if you factor. In reality, most of the companies we work with choose to factor because they are growing quickly and want to fuel additional growth. [Out of all the companies we have worked with over the last 15 years, no customers have left any of our clients after they were notified the company was factoring.]
Once you have considered these three items, you are ready to move on with selecting a factoring company. If you have put thought into each of these three items, you can move forward with confidence that your customer relationships will remain strong as you move forward with your new factoring company.
