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10 questions to ask an Invoice Financing company before signing an agreement

3 Mins read

Getting into factoring is an excellent way to instantly improve your cash flow, but like all serious business decisions, it is one that should be thought out carefully.

Here at GRENKE, we’ve supported thousands of businesses with their growth by removing financial pressures and allowing them to focus on what they do best. We have our partners ask many questions to ensure that invoice financing is a good fit for their needs.

In this article, allow GRENKE’s experts to help set you up for future consultation with invoice financing companies.

1.   Are there set up, review, refactoring, or bank account fees?

Almost all of our competitors charge some or all of these fees, but we’ve waived them here at GRENKE. No hidden fees and complete transparency are good for all parties, so be sure you read all the fine print. If you begin a discussion with an invoice financing company that appears to be hiding charges in the fine print, it’s time to find a more supportive partner.

2.   What are fixed and variable fees?

A fixed fee is when every factored invoice is charged a fixed % against an invoice, For example, a 1% fixed fee against a 10k invoice is £100. A variable fee, is a percentage charge placed on each factored invoice for each day that it remains due and unpaid.

3.   Will I be provided with a dedicated Account Manager?

YES, with GRENKE you will be provided with a friendly, duteous, and personable individual who will act as your single point of contact for all queries and contact. They will get to know you, your business, your needs, the processes, and what cycles you go through. It’s their job to make sure your invoice financing agreement runs as smoothly as seemingly possible.

4.   Will my Invoice Financing company set up a dedicated bank account, or use suspense accounts?

This differs from one invoice financing company to the other, however, our experience and expertise in this industry have shown us the better method. Dedicated bank accounts make reconciliation much easier and reduce the tedious workload.

5a. What is the minimum amount that can be factored?

We have no minimum factoring amount, which means even the smallest enterprises can enjoy our services and relieve some pressure. Even if you only issue small invoices, your Account Manager will be happy to help.

5b. What is the maximum amount that can be factored?

The maximum amount that can be factored is subject to underwriting or credit limits that has been set at point of agreement or as part of the account management process. We follow those limits.

6.   Do I have to hand over all of my invoices?

That doesn’t seem quite right, does it? If a company asks you to do this, you might be wondering ‘what for?’. Well, here at GRENKE we offer a Factoring Choice Product that allows you to factor certain clients (particularly those with longer payment terms).

7.   Can I determine the amount of each invoice I will receive?

The standard agreement is a 90% advance against each invoice, though this will be discussed and agreed upon during your initial consultation with your invoice financing company.

8.   Does my business qualify for Invoice Financing?

Sure! In most cases, businesses qualify for our factoring services. Generally speaking, any business that raises B2B invoices for services or goods that have been delivered and must wait 30/60/90 days for payment is eligible.

9.   Do you offer Debt Protection?

Absolutely! Debt Protection is put in place with every contract to give business owners peace of mind. Here at GRENKE, we want you to feel supported, so in the event that your debtor doesn’t pay up, you are covered.

10.  How do you protect the relationship with my clients?

This is performed by our excellent and dedicated Account Managers, who are appointed the responsibility of being the single point of contact for things like:

Adding new clients
Increasing limits for each debtor
Answering queries and discussing issues

There is also one collection person who is given the task of building a good relationship with debtors on the behalf of our clients. Done well, this creates a very strong and supportive bond moving forward.

Concluding thoughts

It’s great that you came here to do your research before getting started with Invoice Financing, and we hope these questions and answers will give you a solid foundation for any upcoming consultations. Long payment periods can constrain your finances, so many businesses in a pressing time might be looking for a quick fix. We’d prefer to be seen as a long-term solution and partner that can offer Invoice Financing as a way to handle your selected debtors in a careful and respectful way.

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