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Invoice Factoring Company – Why does it take so long to set up a facility?

In short it shouldn’t.

The process should in theory be fairly simple for most businesses. The key is to finding lenders that have an appetite for your business in terms of size, sector and geography. From there the key is providing total transparency.

The process will usually start with a first visit by a sales person from the lender. They should assess your suitability and issue you with terms. This is a key stage as if they don’t address potential issues early on you could be going a long way down a road that will not have a positive conclusion.

If you accept the terms the lender will conduct a pre lend survey which is a mini audit focusing on your processes surrounding invoicing and collecting in debts.

If this goes well a final offer will be issued to you and legal documentation signed. If there are any questions you may be asked for further information.

The final step is usually the verification of your sales ledger and perhaps a reference from your existing invoice finance provider if you have one.

All in all the process can comfortably be done within 3 weeks with most lenders. I have seen deals done within a week where necessary.

So where do delays occur when setting up an invoice finance facility?

It is important to remember that you as a prospect will have a lot to do in this process and a lot of information to provide. This can use up a lot of time as an invoice factoring company will be waiting on you.

Sometimes if information is not disclosed from the outset or the sales person does not ask the right questions the facility can fall down at the later stages meaning the process starts again with another lender.

To ensure things go smoothly divulge anything you feel is relevant at the outset. If the sales person has not demonstrated a good understanding of your business how can they hope to convince their credit team you deserve a facility. If they do not give you confidence move on to another lender. Provide information in a timely fashion – this saves times but also instills confidence.

If you have any doubts it is worth using a reputable invoice finance broker.

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