Invoice Factoring - What You MUST Know 2022 - 2023
There are two kinds of factoring companies out there, traditional factoring companies and as of late, there are more and more unconventional factoring companies that are emerging. What are the differences, what should you be looking out for and what questions do you need to ask, when interviewing factoring companies?
Let's start with explaining the differences between the types of factoring companies and they explain why these unconventional factoring companies are popping up and or converting over from traditional factoring companies to unconventional factoring companies.
What is the big difference between the two?
A traditional factoring company charges you a factoring fee where a unconventional factoring company charges you a factoring fee AND they will charge you an APR on the money they give you. If you sell $50,000.00 in invoices, you will be charged a factoring fee and an APR on this $50,000.00 until the customers makes a payment to close out the invoice.
So... Why are there many unconventional factoring companies emerging and or converting from traditional to unconventional? Being as unconventional factoring companies are charging two fees, they can artificially lower their factoring fee to seem to be more competitive than traditional factoring companies. The vast majority of unconventional factoring companies do not even tell you that they will be charging you an APR on top of their factoring fee, you have to ask. If you do not ask, they will place the APR Fee deep in their agreements, hoping that you do not see it.
Is it more expensive to pay a factoring fee and an APR, even if the factoring fee is lower than what a traditional factoring company will charge? YES, it is a lot more expensive as you will be paying daily interest on the money the factoring company gives you. Unconventional factoring companies are making a lot of money which comes at your expense. This is why there are some many companies out there that converted to unconventional factoring. The good news is that we are not one of those companies. Alliance One LLC has been a traditional factoring company since 1996 and we are not going to convert an unconventional factoring company.
What questions do you need to ask?
1. Do you charge a factoring fee and an APR? If they say yes, you need to hang up and find a different company - Alliance One LLC does not charge you an APR
2. Will you get charge to verify the invoices? Many companies do charge a fee, Alliance One LLC does NOT
3. Will you get charged an online access fee to login to your portal? Many companies do charge a fee, Alliance One LLC does NOT
4. Will you get changed an invoice review fee? Many companies do charge a fee, Alliance One LLC does NOT
5. What other junk fees will you be charged per month? Many companies have junk fees, Alliance One LLC does NOT
Here at Alliance One LLC, we have two fees to you, our factoring fee and the true cost to wire you, your money. We do not believe in charging junk fees and we do not jab you to death with miscellaneous fees either.