After an application has been submitted for factoring, the factoring company begins their due diligence or “checking out†process. Historical background of the business participants, the relative condition of the business itself, who are the customers, their creditworthiness, problematic liens or tax issues, contracts with customers, prior agreements with credit companies, all part of the “getting to know you†element of the receivable funding relationship.
Seeing that the factor is doing a thorough job while may seem cumbersome and slightly an intrusion is actually a very good sign. It means the finance company is not cutting corners, is more concerned that business is transacted correctly rather than whether or not they get a “new deal.†In the long run it amounts to your funding source keeping out of harms way by avoiding the many pitfalls countless commercial finance companies have fallen victim to in the past.
Knowing that the factoring company is financially sound is the best insurance you can have when relying on one for your growth.
Learn about our factoring company by clicking HERE.