Factoring invoices doesn’t work for everybody. Sometimes companies that are doing high volume, low margin sales can’t afford the cost of accounts receivable financing. These are usually businesses that import an item to sell to wholesalers and distributors like computer re-sellers, or telecommunications pre-paid calling cards. This is directly related to your profit margins.
If your business 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. So when considering factoring, consider your profit margins.