Common Customer Reactions to Factoring

If I use a factor to fund my invoices, what will my customers think?

This is a concern of many companies who are considering factoring as a finance strategy. However, establishing a credit line is a positive statement–not a negative statement–to make to your customers. Not all healthcare companies qualify for lines of credit.

Selling accounts receivable to generate cash is a finance method used by very large corporations worldwide, with the factoring service provided by the largest banks in the nation. In the past, only large corporations with millions of dollars in receivables per month qualified for factoring. Often factoring companies refused to work with smaller companies or companies with a large number of small invoices. Because factoring is widely known, your customers will view this as a positive ability on your part to secure financing, not as a problem with cash flow.

It’s likely that many of the healthcare institutions that you service already deal with factoring companies and may not even be aware of it. Sometimes payments for invoices directed to a P.O. Box are actually going to a factor. Shell Oil, Georgia-Pacific, IBM and other substantial companies factor millions of dollars of their accounts receivable every year.

Financing obtained through the sale of accounts receivable factoring is most often used by a firm to expand and take on larger projects; not merely for cash flow or payroll. Now that this service is available to companies like yours, you can enjoy both the perception and the reality of being a growing company, moving forward.

Still worried about how your customers will react to a factoring company?
View PRN Funding’s What to Tell Your Customers page to learn how to talk to your customers about factoring.