Online quotations for factoring:
A word of caution
There are many websites that provide online quotations for factoring and invoice discounting facilities. Although these are a useful way of obtaining quick price comparisons, they should be treated with care.
Through our experience of working with customers who have initially used these sites they produce figures which ultimately have no relevance to the final funding proposal or standard of service because of:
- Amended quotations - Quotations are produced automatically using formulae that are built into the website. Providers use a variety of criteria to calculate the initial payment percentage and often one of the criteria could significantly affect the amount advanced, for example a large number of credit notes raised.
- The focus on price - One of the benefits of a site that allows you to compare online quotations is that you can compare the price charged by different providers. However, there is a drawback with this approach in that it doesn't focus on the service you will receive or the nuances of how the provider operates.
Whilst price comparison is important, in practice there are subtle differences between the way that different factoring and invoice discounting companies operate and these differences need to be understood. Factoring with one provider may suit one business but not another due to the nature of the product or service provided.
- Business finance services - A Guide to Factoring and Invoice Discounting
- What is Invoice Discounting?
- What is Factoring?
- Is factoring/discounting suitable for our business?
- Online Quotations for Factoring - A Word of Caution
- The Advantages and Disadvantages of Factoring and Invoice Discounting
- Recourse and Non-Recourse Factoring
- Bad Debt Protection/Credit Insurance Protection
- Export Factoring/Discounting
- Understanding the Funding Proposition
- Security Required by a Factor or Discounter
You may also find our business finance glossary of terms useful.