From time to time we get urgent calls for more credit availability on a particular customer. The way this happens is, when we do our due diligence on a specific account debtor (customer) we assign a credit limit of how much we intend to advance based on invoices to that customer. For instance, if the customer’s credit report shows an average outstanding balance to their vendors as $10K, we will not be able to fund a $100K invoice. Neither should you offer them terms by the way.
Once we determine the credit limit amount for a customer, that amount can be raised over time providing that their invoice payments are made in a timely fashion and they respect the proper remit to address change to the factor. The customer earns greater credit over time. This happens frequently.
But often times the credit limit is a reflection of how the customer pays – which tends to be late. The point here is – if the credit limit of the customer has been reached, and you are trying to get another advance on a new invoice but the aging shows a significant amount on their account is overdue, put pressure on the customer to get their payments up to date, not on the factoring company to extend that customer more credit. Call that customer and bug them to open the door to gain access to more working capital from us.