It is an important process making a decision of whether to welcome a new company into our portfolio of factoring clients. Are we interested in financing invoices within a particular industry? Is the size of the deal right for us? Will the company be a good fit, easy to work with? Probably highest on the list of factors is; who is in control for the prospective company? Their background in this business, what kind of team have they assembled, what assets are they currently using to run the show?
So please, don’t take it personally when we start asking some pointed questions about the company, the owners, and anybody that might have access to the finances. When a prospect tells us that they don’t release their financial statements to anyone, it says one thing about them – they’ve never closed on a commercial loan before. Company financial statements are not considered proprietary information to a commercial lender who is considering extending credit. Neither is asking about your personal background. There are two parts to asking for this information. One of course is the information itself, but the other is equally important. We are entering into a relationship where a level of trust has to be established. Not being forthcoming is a red flag.
Bottom line – what does this mean to you and more importantly to the rest of our favored clients? If you enter into an agreement to get your invoices factored you want to be sure that the funds will be there when you need them. When you submit an invoice, you want a wire that day or the next. You don’t want to find out that the factoring company has been swindled out of its money. So yes we ask touchy questions to prospective clients. But it’s so both of us can sleep at night.