factoring quotes compared
Factoring companies offering a second rate service are far too common and as most industry observers will know, size and reputation are no guarantees of quality with
many of the largest and best known names also known for their poor quality
service.
This makes a comparison between factoring quotes difficult as two factoring companies may quote the same interest rate but the actual cost will depend on the efficiency of the factoring company when running the sales ledger and their overall credit control.
Whilst two factoring quotes may offer identical rates the actual costs will be very different. A large bank owned factoring company with inefficient sales ledger management may have individual staff carrying a much higher workload than the independents. Very little credit control may be done by telephone, relying instead on computer generated letters and tightly crossed fingers. It is no surprise that if the customers aren’t asked to pay, they won’t and it doesn’t take long before the original average credit period which may have been 60 days has slipped to 70 days.
Conversely, the independent factoring company with an effective and professional credit control policy and sufficient staff to carry it out properly may manage to reduce the average period that the customers take to pay their debts from 60 days to 50 days.
The difference in cost between the two facilities described above will be significant despite the original quotes being identical.
A further intangible cost of poor ledger management is the increased risk of bad debts as in general the more ineffective the credit control the higher the likelihood of bad debts.
In addition to offering a second rate service many factoring companies also try their hardest to restrict the amount of funding that they are providing as we will demonstrate if you click the link to read about the artificial funding restrictions imposed through unapproved debts