Most commercial lenders, like factoring companies, who excel in their business take the approach of “worse case scenario.” We are always looking at each part of the transaction to see where it could blow up and cause potential harm. For a factoring company this is especially critical because there are more moving parts than with a typical bank loan.
It starts with the proper due diligence when a client submits an application. What many times seems like a fairly straight forward process, can sometimes involve twists and turns that require both the factor and the borrower to stay on the same page. Many times a borrower thinks by going somewhere else the questions will go away – but for the most part all factors look for the same information.
Once the client is set up and ready to go, notifying the customer properly, verifying invoices for work that is completed and accepted becomes the attention grabber. This can be a delicate procedure as we discussed in an earlier post. But it still needs to happen in a manner that insures safety and security when dealing with receivables financing.
And the last part, collecting the invoice payment is obviously most important. How could this possible go south on us? Every step of the way we have to guess in advance – what could possibly go wrong? And, how can we mitigate the risk of a mishap. I try to tell my clients, if it seems like we are going to great lengths to dot our i’s and cross our t’s, then you should be able to sleep at night knowing we’re not getting into trouble which would have a direct affect on your business if we could not fund.