When deciding between factoring companies, it is important to not only compare rates, but actually review the total factoring COSTS of selling your invoice. Invoice fees, overnight fees, high aging fees, setup costs, etc. add to the cost of factoring.
If “John Trucker” has a $1,000 invoice and sells it to ABC Factoring at a 2% rate, you would expect to receive $980 for the invoice. But did he remember to ask about their fees before signing up? ABC Factoring charges a $5 invoice submission fee, $15 invoice processing fee, and it will cost him $20 to overnight his invoice documents to the company. Now he’ll only receive $930 for his invoice, turning that 2% rate into 7%. This does not include the same-day funding fee, setup costs, Transflo transaction fees, or aging fees. Soon he will be running himself ragged simply to keep his business going. No one likes wasting money on hidden fees.
Don’t fall victim to the “teaser” rate. This rate typically only remains good if the invoice pays within a very short amount of time, then jumps up before your customer pays within their standard terms. The next time you are comparing factors, ask questions to find the TRUE COST of their program.
With TAFS, you work with a factoring partner who believes in keeping costs low and straightforward. We are transparent and up front with the true cost of factoring. Every day, we receive phone calls from actual clients like “John Trucker”, who signed with a factoring company because of a great rate, only to realize he was paying much more. TAFS can help. Give us a call or submit a quick quote form (on the right) and a TAFS team member will reach out to you!