4. June 2009 04:17
Almost to the client we are asked this question. Understandably this is a common concern of most new clients.
First, lets understand that as discussed in my previous blog about factoring, it is not a black mark for a business. In fact it is very normal for a business to have a line of credit. Factoring is little more than a line of credit which utilizes accounts receivable as collateral. Having a factoring line in place can help to put your business on a much stronger footing than your competitors. You have the advantage of being able to positively manage your cash flow.
You might be surprised to find out from your customers that some of them are already familiar with factoring and may even be having some of their invoices from other vendors factored.
What do you tell your customers?
Tell them due to growth and to keep up with your cash flow you have decided to factor your invoices. This is a positive step for your business and will allow you to continue providing your customers with the great service they have come to expect. Your customers will continue to have the same level of contact with you that they have always had.
By the way, this is also a benefit to your customers as it allows them the luxury of paying on terms. You’re not the bank…we are! So, let the factoring company worry about when your customers are going to pay your invoices.
Communicating proactively and positively with your customers will go a long way in making factoring a smooth transition.