We are contacted by some companies that are doing high volume, low margin sales. These are usually businesses that import an item to sell to wholesalers and distributors or computer re-sellers, or telecommunications pre-paid calling cards. Going through the initial stage of learning about your business the question will come up, “what are your profit margins?”
If your gross profit margin on a sale is less than 15% then factoring invoices will not work for you. We actually prefer profit margins in excess of 20% to feel comfortable that you will be able to afford the financing and continue to have suitable profit to grow the company. We don’t bring on new clients just to get the business; it always has to be a win-win proposition.