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If you are looking to compare factoring companies it can be challenging on a number of levels but the team at SFQ are happy to help. They work with the invoice factoring market on a daily basis and understand how to compare factoring companies and the services that they offer.

The challenges of comparing factoring companies

Invoice factoring companies all operate so differently both in terms of the services that they offer and the way that they price their facilities.

In terms of the facilities that they offer, the criteria for those facilities can differ dramatically, as can service levels. Some factoring companies are well known for being real service providers that pride themselves on good service while others are much more low touch. I am a firm believer that the structure of a factoring facility is by far and away the most important element of any facility. It will determine how much cash the facility actually generates and how easy it is to operate on a day to day basis. Some lenders are very flexible and can accommodate the unique requirements of your business while others are very prescriptive meaning that your business has to fit their rigid model – this can cause major issues including business failure! It is important to understand the unique characteristics of your business, it’s processes and your debtor book from an invoice finance providers point of view. Again, Funding Solutions UK Ltd are more than happy to assist you with this and highlight what you need to be aware of in terms of potential issues or funding restrictions.

Funding restrictions can include the overall facility limit, debtor limits, export caps, concentration limits, recourse periods and others. Only by understanding the quirks of your business can you understand what you actually require from a factoring company.

In terms of comparing the quotes of factoring companies this can be difficult. Lenders typically quote headline rates which can be misleading. The headline rates are typically the service fee and the discounting fee. Some lenders provide all their services within the price of the service fee while other lenders charge for virtually every service in addition to the service fee. Additional fees can include set up fees, renewal fees, audit fees, fees for setting up credit limits, minimum base rates, refactoring fees and many more. These fees are not always apparent in the quotations provided. This problem is somewhat compounded with lenders having different names for what is arguably the same thing and not all lenders charging fees in the same way. My advice is to focus on total costs when comparing factoring companies. Look at what it will cost you to run each facility for a 12 month period and always ask for a list of additional fees.

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