Steady, predictable cash flow is the main reason businesses use accounts receivable financing but if you’ve never done it before, you might be wondering how best to qualify for invoice factoring services. If you’re hoping to apply for factoring, it’s good to be prepared and get to know some of the typical requirements that will be asked of you as you’re shopping around; it should also help you get funded faster if you’ve gathered everything you need in advance.
Factoring companies are not governed in the same way as a commercial bank so each one will have different requirements and processes but as a general rule of thumb they’ll be looking for the following from a prospective client;
Although it’s not a requirement, a trade credit insurance policy can be appealing to a factoring company and will simply bolster a factoring application.
Common documents requested for a factoring application
As part of the factoring application, these are some of the more commonly requested documents that you’ll be required to complete or provide;
Although dependent on industry-specifics, arranging a factoring agreement is generally a much simpler and quicker process than applying for a bank loan or other, more traditional finance. A less than perfect credit rating, exhausting bank lines of credit and being a relatively new business with no history shouldn’t deter you from applying; factoring companies are able to take a more flexible view of your application and are more concerned with the credit-worthiness of your customers than your credit rating or track history.
Factoring companies are all different, with varying guidelines and beyond comparing by rates, you might want to consider other ways to choose an invoice factoring company to ensure you find the right fit for your business needs and goals.
Whatever your needs, we’re always happy to assist with any questions you might have on applying for factoring or the factoring process – reach out to our team today and be funded in as quickly as a few days.
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