The Tricks to a Perfect Factoring Application
When you apply for factoring, you’re selling your accounts receivable to a third party known as a factor at a discount, so you can have the benefit of cash upfront without waiting for the invoices to be paid. There are some things you can do to increase the likelihood of success with your application. Here are a few of them to take into consideration.
Good Documentation Habits
If your company doesn’t have good record-keeping habits and practices, it will be quite difficult and time consuming to prepare your application. Put into place an organizational system for keeping your books in order. Not only will this help you to keep better track of your business transactions, it will put the information you need at your fingertips when you are assembling the documents you need for your application.
Financing with a factor is based on an examination of your business relationships with your customers, particularly regarding how dependable your clients are in terms of making payments. If you don’t have a solid line of communication between your company and your clients, chances are good that payments may be more difficult to collect. Establishing a direct and open system for clearly outlining your financial terms with your customers is essential for your financing application. If you have trustworthy business relationships with your clientele, you’re a better credit risk. This can improve the possibility that your application will be approved.
Use Strong Invoices
When you apply for factoring, you’ll be required to submit an invoice for financing. You should choice an invoice from a client that you have a long-standing relationship with, or one who you feel confident is reliable in terms of payment. Showing that you can provide invoices that aren’t difficult to collect on makes your application more appealing.
Make Your Business Visible
Since a potential factor doesn’t have many ways to get to know your company other than your application, it’s crucial that your company has a solid online presence. Your website and social media presence can help your application, by showing your business’ reputation and allowing potential lenders to get a feel for what your company is about and how it operates.
Submitting your application for factoring doesn’t have to be a stressful procedure. Take a few important steps to be prepared and put your best foot forward: accurate documentation and organization, clear lines of communication with customers, company visibility and reliable invoices. The extra effort will help your application have a better chance for success. To learn more about factoring contact Growth Lending Group today!