What are Factoring Rates?
When a company considers factoring its receivables, one of the initial questions has to do with accounts receivable factoring rates.
Unlike other industries, accounts receivable factoring rates are not determined by a credit score and can't be quoted over the phone without first answering a number of basic questions to determine which variables may affect rates.
Variables that affect invoice factoring rates
Rates can vary from below one percent to over five percent of the face value of the receivable. When a factoring company reviews an application to determine the factoring rate, it takes into consideration many variables, such as: a company's sales volume, the credit strength of its clients, payment cycle trends in the subject industry, invoice amounts and the overall climate of the subject's industry.
Another item that can affect the rate is the existence or the opportunity for accounts receivable insurance.
A company's credit score or the number of years it has been in business aren't major variables that influence rates.
How to get accurate quotes for invoice factoring rates
Ultimately, the best way to truly know what rates your company can receive is to take the few minutes to fill out a simple one-page form. While that's all it takes to get the process started, keep in mind that any quote given is simply a starting point. Factoring companies can't guarantee any quote until all requested documents have been provided and all information has been verified.
Look for a factoring company that has experts on-hand who will happily tailor a program to suit your needs.
