If you are looking for a factoring company then it is imperative you choose the one best suited to your business and your factoring requirements.
Factoring companies all differ in terms of how they structure facilities, what restrictions they impose and of course how they price their facilities.
In a basic level each factoring company offers different prepayment levels and different pricing structures.
The pricing structures in particular are very important. some factoring companies will have very simple and transparent fee structures that are easy to understand. Other factoring companies have a raft of additional fees that are often hard to calculate. When looking for a factoring company and comparing pricing it is important you consider total costs.
In terms of restriction different lenders will impose various limits or caps.
Concentration limits refer to how much debt a lender will finance with your largest customer. Some lenders are happy to see 100% of invoices with your top customer while others want to restrict this to 20%. If you have a large customer that accounts for all or a large part of your sales ledger then this is an important consideration.
Debtor limits refer to the funding limit given to each debtor. This can differ dramatically between different factoring companies so it is important you check.
A funding limit refers to the overall facility limit you have in place. This can be very important as some lenders can only fund up to a certain amount such as £250,000 or £500,000. If you require a larger limit or are planning expansion then this is very important to consider.
As you can see there are a lot of considerations when choosing a factoring company and we believe it is important you make the right choice from the outset.
