This client-focused credit check is what determines whether your business gets approved for factoring or not, as well as the factoring rate and advance your business will be offered. The more creditworthy your clients, the higher your advance and the lower your factoring fees.
Ongoing Credit Assessment Service from Factoring Companies
Factoring companies provide a valuable and unique service by assessing your customers’ creditworthiness on an ongoing basis (if you need it). This information can help you decide whether to take on new clients, request upfront payments, or reconsider your relationship with existing clients. Unlike traditional financial institutions like corporate banks, factoring companies actively evaluate your customers’ credit standing, equipping you with crucial information to make informed financial decisions for your business.
Unlock the Benefits of Credit Check Services from a Factoring Company
Credit Risk Management
Factoring companies’ credit checks help you manage customer credit risk, particularly when dealing with new clients. These services empower your business to quickly evaluate the creditworthiness of new customers, reducing the overall financial risk.
Improved Cash Flow
With immediate access to cash and customer credit vetting, you’ll see a significant boost to your cash flow management. If the factoring company deems your customer as low risk, they might pay out a higher percentage of the invoice – up to 90%! Plus, a low-risk customer base can fuel your growing business with improved cash flow.
Professional Credit Analysis
Factoring companies provide professional credit analysis, a cost-effective and valuable third-party financial management service. Risky customers can be identified quickly, helping your business avoid debt on accounts receivables and build a low-risk customer base over time.
With the factoring company handling your credit risk management, it frees up time for you to concentrate on growing your business. By managing your credit checks, they streamline the process of taking on new customers, which is especially valuable for small businesses with limited capacity to conduct urgent credit checks themselves.
Customized Credit Limits
Customized credit limits on factoring lines of credit are based on your customer’s credit history. This helps your business manage its factoring strategy and confidently enjoy the benefits of improved cash flow.
Remember, not all factoring companies provide the same services, so be sure to thoroughly read your factoring agreement to see if the factor you choose offers ongoing credit checks and whether they are included in your factoring fee or if you will be liable for credit check fees. Learn more about what to look for in your factoring agreement with this educational Factoring Guide.
If you’re searching for credit check services from a factoring company, contact us for a free factoring rate quote today.