Factoring is an excellent option for companies who experience financial problems frequently. If you are facing cash shortage then you can use the option of factoring for this purpose. Most of companies always struggle to meet the challenges of financial dealings. Especially new and low cash companies experience the cash shortage problem frequently. Therefore if you want to escape from this condition then use of factoring is a best option for you. To use the service of factoring you should meet with some requirements. The basic requirements of invoice factoring are discussed below
To apply for invoice factoring your company should have hundreds of customers with excellent credit. The customers should pay the installments on time. The collection of whole credit should be completed within 90 days. Any delay in the repayment will result in extra charges. Most of your customers should have habit of paying the bills on time. The presence of customers with poor credit score will disturb your company reputation. Therefore no factoring company will consider you in this condition. Therefore first make your customers regular in repayment then hire any factoring company.
Factoring company will not accept the invoice of future. They will accept only already issued invoices. Therefore first prepare the invoices then apply for factoring service. Proposed invoices are not accepted by the factoring company. Keep in mind that repayment duration and time should be 90 days. If you have repayment duration of more than 90 days then interest rate will exceed. Therefore you should keep this factor in mind.
Your company should not involve in any kind of problem and fraud. Your customers should have very good credit score and history. Similarly financial background of your company should be clean. There should be no tax and loan issue. With clear and neat background you can easily qualify for invoice factoring service.
Company owner should have clean history and he should not involve in any kind of fraud. He should have positive bank statement and history. Personal issues are more important in business and industry. Therefore always take care about it. Factoring company will inspect your behavior and history. The presence of single case in police station may result in failure of your application. Therefore try your best to keep your personal record clean and neat.
