![]() ![]() But what service are we offering?įactoring has many forms. Unfortunately, accepting the wrong clients can prove very costly, but turning away potentially good clients is also unhelpful to a factor’s success. The level of due diligence to apply is about making the right choices. Then, there are the more “old school” lenders, who insist upon “kicking the tyres”, visiting the clients’ premises and really understanding the business they may decide to finance. Many factors are moving towards automated digital processes that make decisions on what businesses to accept and which ones to refuse. There is a philosophical position to take here. Who are the people behind the business? Is the business viable? What is the track record? Lending money is about risk taking, but if an opportunity looks fishy, smells fishy, it probably is fishy, so best to put it back in the sea for someone else to catch! A factor really needs to understand what they are getting into. There must be robust processes around vetting potential clients. Like with many things in life, a factor needs to be able to say “no”. All these processes require the systems to do as much of the hard work as possible, leaving the business people to do all the complicated tasks.įirst things first, picking the right businesses to become factoring clients is a key to success. New clients (hopefully), new debtors, new invoices, advances/pre-payments, collections from debtors. What happens day to day in a Factoring operation? ![]()
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