I ran across this article a few months ago and it got me thinking about what makes a successful or reputable payroll factoring company. In Factoring, as with any industry, there are some companies and/or individuals who do not carry themselves in professional and client-centered ways. They abuse the system, making reputable alternative lenders look bad.
The Market Weeds Out the Bad
When something happens, such as banks tightening their lending and financing avenues as a result of economy struggle, financing avenues such as accounts receivable or invoice factoring have high demand products.When this happens you will often see some unscrupulous people jump on the bandwagon to make a quick buck. Ultimately, however, the market has a way of sorting this out. The market begins to weed out the companies who overcharge, don't provide good and legitimate services, and/or treat clients badly. After a few years, you will see the reputable companies rise to the top.
Business Leaders Utilize Factoring as Key Cash Flow Strategy
In my opinion, that's what happened with factoring, starting in 2008-2009, and now we are seeing the cream rise to the top in 2013. You are finding increasingly more business leaders who are finding the merits in solid, reputable factoring companies. They are making factoring a staple of both their financial and their cash flow strategy.
Some of these business leaders had no choice; they had to try factoring as a means of survival since the banks turned their backs on them. Many, though, have also recognized the benefits of factoring and how it can be a viable tool among other financing tools, such as bank lines of credit or traditional bank loans.
Another thing they are realizing is that even though the costs may be slightly higher than a loan, they can save money due to the invoice management that the factoring company provides. The factor's services include analyzing the credit of the client's customers, and collecting invoice payments. This outsourcing of accounts receivable functions allows the company to be more efficient, even being able to reassign or eliminate the invoice collection employees. This, of course, lowers overhead.
One of the other areas that stuck out to me in this article was how innovations taking place in the factoring marketplace were helping clients. The result of valuable innovations is how they help the client. The new products and services that some factoring companies are developing will continue to create demand and offer alternatives to traditional bank lending. I'm all for that because ultimately it benefits you, the client. It gives you more choice and more options for growing your business.
How to Find a Safe and Reputable Payroll Factoring Company
Lastly, let me leave you with my colleague Tim Valdez's list of precautions about how to keep alternative lending, such as factoring, safe. I agree with him wholeheartedly and assure you that Meritus is committed to being one of the good guys‚Äù, the reputable companies in the factoring industry.
Valdez says that location isn't a big deal. Industry specialization and experience is a far bigger criteria to consider in selecting a funding partner.
At Meritus, we strive everyday to be the best in the business so to speak, and welcome your scrutiny as we work to earn your trust and create a mutually profitable and ongoing business relationship. If you'd like to learn more about us or set up a factoring relationship, contact us at 877-648-3709 or contact us.
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