Another distinction regarding how factoring companies operate is the charges associated with setting up an account. Many factors require a non-refundable application down payment to offset the expense of doing due diligence on your company. This includes various searches like credit, background, UCC filings, corporate good standing verifications and the like. Additionally there are expenses for overnight delivery of documents, filing a UCC-1, and potentially legal costs for situations that have abnormal conditions that may have to be reviewed.
Some factoring companies charge up front for this or they may deduct this cost from the first advance when you get your first funding. This could also be considered “closing costs.†This fee could be presented as a percentage of the line amount. For example, if the factoring line is for a specific amount available, the closing cost would be a percentage of that and would be deducted from the first advance.
Again, Creative Capital Associates differentiates our funding offer by not requiring any of these charges. There is no application fee, nor any due diligence costs or closing charges – you only pay for the factoring of your invoices.