Invoice Factoring

Written by Linda Alexander
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Invoice factoring is a commonly used practice whereby businesses can gain better control of their cash flow. While it used to be used mainly by companies who were in trouble, nowadays it's a short-term solution that nearly every industry uses at one time or another. Still, working with a factoring service can send a negative signal to your customers.

Be sure to carefully select the invoice factoring service you work with. They are going to be dealing directly with your customers, who probably will not even know you have sold their accounts. However, if your factoring company is unprofessional, it will send a negative message to your clients and you could wind up losing their business.

Your Clients and Invoice Factoring Knowledge

Also, if customers do discover that you are taking part in factoring, they will know that you need cash, and will probably wonder why. Even if your company is thriving, growing faster than you ever imagined, they might envision you having financial trouble. Therefore, you might want to only sell your most risky accounts, and keep your important accounts out of the process.

You could also choose invoice factoring only for your best customers. If you have a good working relationship with them, you could openly communicate to them that you are working with a factoring company, and tell them why. Tell them you are reorganizing your company and want to reduce some debt. Do not let them know that you are having trouble handling your budget. Instead, comfort them by giving the same great service you have always given them.

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