Factoring and Invoice Discounting

5. Picking a Factor

You will probably want to talk to several factors and get quotes from more than one before you make a decision.

5.1 The Asset Based Finance Association can provide a list of factors with contact numbers, services and turnover requirements (020 8332 9955).

There are many independent factoring and invoice discounting companies, as well as subsidiaries of the major banks.

• A factoring broker can advise you and may be able to negotiate a better deal. Most brokers do this work free of charge (as they receive commission from the factoring company).

5.2 Confirm that all the factors you are considering offer the services you require, at the right price.

• Ask how each factor's credit-control system works. Will the factor want to pre-approve future customers? What credit limits will the factor want to set? How quickly will the factor make decisions?
• Confirm each factor's proposed finance, credit management and credit protection charges. These will be negotiable and should reduce as your turnover grows. Some factors may want to charge you for a survey of your debtor book before they will.