When borrowing capital from outside sources, your business model – how your company operates is a component that goes into the initial due diligence to qualify for financing. When a factoring company is considering a potential client for an ongoing relationship here are some of the items we will be considering;
1. Are all sales final – no consignments on product to be sold or returned
2. No pre-billing – submitting invoices prior to work actually completed
3. Are there many 90 day overdue payments on the AR aging
4. Are customers taking credits off the full payment on invoices
5. Will the customer allow for verification of the invoice
6. Do service contracts have milestone or progress payments
7. How many accounts are involved, are they comparatively the same size
Questions like these go into the process of determining whether a potential client will be a proper fit for invoice factoring.