Selecting a Factoring House
What you expect of them
What they expect of you
This is a big topic, so let’s take a hypothetical business and follow its progress in finding a factor.
John Edwards owns an auto parts and repair shop, JE Automotive. He loves what he does, and he’s good at it. Unfortunately, he needs to pay his inventory on a 30-day basis. But some of his customers are not able to take care of major parts and repairs in a single payment. And he has a couple of large business customers for whom he provides service on a fleet of vehicles. Even if they pay on a 30-day basis, he winds up carrying several thousand dollars a month for each of them.
Therefore, he’s decided to sell his receivables. He wants to find a place that will take much of the A/R process out of his way so he can focus on what he does best. He’s looking for a place that will do the following: