An important part of being in the factoring business, is what is known as “due diligence.” After being approached by a prospective client, a factoring company typically undertakes a thorough due diligence program that typically takes about 24 to 48 hours.

And part of this process, is the site visit, which must be taken seriously when performing Due Diligence for invoice factoring transactions.

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A common question among companies is whether they should pursue bank factoring or deal with a company that specializes in factoring when deciding to sell account receivables.

In the past, financial relationships were largely with your own personal banker. Nowadays, your car loan may be from a completely different financial institution than your home loan, business credit line, or credit cards.

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There are a lot of misconceptions about Factoring accounts receivable. The two biggest myths are It Costs Too Much and Lack of Flexibility.

That may have been true in “the old days,” but nothing could be further from the truth today. It May Cost More NOT to Use Factoring Ask someone on the street and they may tell you that factoring will cost you anywhere from 10% to 50% per transaction. Of course these people have never actually used factoring (if they did we sure would like to know who charged them that much).

In reality, an experienced finance professional will tell you that the average opportunity cost to factor is between 2% and 5%. Yes, some companies will do deals at 1% but these are typically reserved for Fortune 500 payers and exceptional circumstances.

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