A not so obvious distinction between different factoring companies is – where do they get their funding? The greater majority of factors borrow money from banks. This could have direct consequences by the time it comes down to you getting financed. Some banks require much more oversight in the operations of the factoring company. Issues like customer concentrations, credit ratings, credit insurance, security interests in contracts and corporations are just a few decisions that might travel through the factor and be regulated by the banking relationship. Usually if the factoring company has a stellar track record you will not see outright veto of funding decisions, but you could very well see parameters as to what is permissible or not.
You will find that the eccentricities of the financing relationship do not show up on the surface. It takes time for these sorts of problems to show up. Some factors are better at dealing with this than others.
Another potential liability in this economic climate is the sudden loss of a funding source. The factoring company you have relied on could lose their access to capital altogether leaving the entire portfolio without an ability to get necessary financing. In the invoice factoring community, this has been known to happen. Not frequently, but there are usually early signs of trouble that reflect something isn’t right.