Heart-to-Heart: Building a Good Factoring Relationship

Heart-to-Heart: Building a Good Factoring Relationship

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Netflix turned movie-watching into a series of clicks, Chili’s tried to automate eating out, and now online financing companies offer small businesses one-click funding. In this age it’s easy to assume that doing something online means it no longer involves a human relationship.

But online invoice factoring companies still value a relationship with you. A bank or merchant cash advance provider will re-evaluate you every time you want new funds, and you have a series of individual deals with them. But invoice factoring credit lines are usually “revolving” – meaning that as old funds are repaid, you can draw new funds without re-applying. This means that invoice factors take a longer-term view, since a single application gives you access to funds whenever you want them.

A good relationship with a factor can lead to credit line increases, discounts on fees, and faster service when you have a sudden need. Here are three tips to keep that good relationship going.

1. View your invoice factor as a problem-solving partner

Start with the attitude that you and your invoice factoring company are on the same team. You and your factoring partner have aligned incentives: you both want your customer to pay. Your invoice factor wants to recoup their advance, and you want to avoid late fees and build your business credit.

If something goes wrong, you may feel the responsibility to have it all figured out before you contact your invoice factoring partner. Fight this urge: waiting means you lose a thought partner. Your invoice factoring company has almost certainly seen your situation before and may be able to give you valuable advice that will help everyone resolve the situation easily.

2. Make sure bad news comes from you

Imagine you own a glass manufacturer and you get a call from a customer saying they received a shipment of defective glass. You have a serious headache on your hands: you need to fix the problem, and you need to figure out what happened within your own company that caused the issue.

Now imagine that instead, your shift manager comes into your office and says they just found a problem: all of the glass that was made in the last 12 hours is defective because of an error they just caught. While you may have a late night in the office, you will be glad that they brought you the bad news in time to prevent an unhappy customer. You will also trust the shift manager more in the future.

Similarly, alerting your invoice factoring company to potential issues will strengthen the relationship, while letting them find out only after the fact will hurt the relationship.

Has a customer told you they are going to be late in paying an invoice? Did a customer accidentally send a payment directly to you that should have gone to the factor? Alerting your invoice factoring partner to the “oops” will build trust and give you an ally in figuring out how to set things straight.

3. Be responsive when your factor has a question

Sometimes your invoice factor may need to verify an invoice, confirm that you updated payment information, etc. Be friendly and help, or refer them to the right person. Your account manager at a factoring company spends their entire day helping you and others get money quickly and smoothly and ironing out problems. Being responsive and helpful when that account manager needs to work with you not only ensures that there will be no interruptions to your funding, it also goes a long way toward building the relationship.

Choose a true partner

If your factoring company wants you to treat them as a partner, shouldn’t you make sure to choose a good partner to begin with? As you shop for an invoice factor, look at more than just the rates and fees that they quote you.

Are you confident that your invoice factor is transparent with you?  Is it easy to see all of their fees on their website and do you get simple answers to the questions you ask, or do things sound confusing or too good to be true? Transparency is a two-way street, and you want to make sure they are being open with you, too.

Does your factor require a long-term contract, or can you leave at any time? Signing a contract for a year or more may change the dynamics of your relationship, since the invoice factor now has you locked in.

In summary

A good partnership is all about trust over time.  Build that trust with your invoice factoring company by viewing them as a partner if there is an issue, by being upfront about issues instead of letting them be surprised by it, and by being responsive when your invoice factor has a question. To get started on the right path, shop carefully for an invoice factoring company that will treat you as a partner, too, and have an incentive to provide you with good service at all times.

Taking these simple steps will ensure that you have a smooth relationship with your factor and can always get your business funding needs met quickly and conveniently — so you can spend your time watching the latest movie on Netflix.


BlueVine provides working capital to businesses through its 100% online solution. With transparent fees, same-day funding, and no long-term contracts, BlueVine is helping small business owners focus on growing their business rather than managing their bank account.

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