Comparing Factoring Companies

Factoring is a great way to make your invoices work for you today instead of tomorrow. Building a working relationship with a trustworthy factoring company just makes good sense. It’s essential to keep in mind that not all factoring companies are the same.

There are some important things to think about and consider before you choose your factoring company.

1. Application Fee- Some companies charge a fee to see if they will work with you. These fees can be rather high, and $100-$150 is often considered to be reasonable. At River Rock Financial we do not have an application fee. We work with you at no charge to see how we can best benefit your company by getting you money to invest in your own future.

2. Due Diligence Fee - This is very similar to the application fee. You should not have to pay for both fees as they are basically the same thing. A reputable company is in it with you for the long haul, so they should not be making money on upfront fees. At River Rock Financial we do not charge a due diligence fee.

3. Reserve Amount - All factors are going to have a reserve amount. We will fund from 10-90% of the face value of your invoices, depending on your companies needs. A reserve is typically between 20-30% of the invoice amount, depending on the transaction. We have a set 10% hold back, 20% for construction companies.

4. Minimum Number of Invoices - Most factoring companies will require a minimum number of invoices to be factored, some will even require all of your invoices. At River Rock Financial we believe that you should have the flexibility to pick and choose when you need to factor. You can sell as little as one invoice! We can go over the percentage of portfolio on a case by case basis.

5. Renewal Fee - This is a fee that some companies will charge annually. We want your business and do not charge you any sort of renewal fee.

6. Invoice Copy Fee - Some factoring companies will actually charge you to copy your own invoices! If a company charging this it’s usually a good indicator that they will have other hidden fees as well. We do not charge you to copy any of your invoices or forms.

7. Long Term Contract - Often factoring companies require you to sign a long term contract. River Rock Financial does not have a set contract. We simply have terms and conditions that outline how business will be conducted. This means that you are not tied down to sell a specific number of invoices, or be locked in for any length of time.

8. Help Screening New Accounts - Before taking on a new account some companies will help you screen their credit worthiness, at a fee. This is a completely optional service that we are happy to help you with if you so desire, at no charge.

There are many things to consider when choosing a factoring company. At River Rock Financial our mission is to help your business grow by providing you with the financial support that you require to either compliment and enhance your current sources of financial support, or to act as a bridge to conventional sources not yet available to you.