Is it bad to Factor?

Over the years, there have been many misconceptions and a lot of misinformation concerning the factoring business. We would like to set the record straight and tell you right now that none of these myths are true. In fact, we would like to give you the straight goods on two of those myths:

The first common myth is that factoring is an indication that a company is in poor financial condition or has been mismanaged to the point that it is in dire financial circumstances. The couldn’t be further from the truth. In fact, quite the opposite is true. Factoring is one of the fastest growing financing mechanisms in North America, particularly in the transportation industry. Not only is it a common business practice in our industry, but chances are that many of your competitors are already using factoring to their advantage. Not only are they able to get paid almost immediately but they are also able to jump on growth opportunities as they arise.

The other common myth is that factoring is a very expensive form of financing. This is also completely untrue. While there certainly is a cost attached to factoring, it is far less than it appears when you consider some of the savings such as decreased credit and collection costs and fewer bad debt write-offs. When you consider these cost savings as well as the increased opportunities available to your business, the cost is much less than you think. Often it is just pennies on the dollar.

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