Changing factor

AS with any arrangement with any financial organisation, it can pay to shop around to make sure you are not paying too much.

Factoring companies can arrange almost instant quotes for the services they can provide, once they know some basic details such as the number of creditors you have, volume of invoices and your turnover.

If you already have an arrangement with a factoring company, there is nothing to worry about because they won't find out that you're looking around.

One key thing to consider is the termination period on your existing contract. You may also want to check if you contract is a fixed period.

Breaking either of these terms could result in a sizeable termination fee.

If you do decide to move to a new provider, then they will approach your existing factor and agree a transfer date.

The companies will then work together to ensure a smooth transfer, which is essential for your business to ensure the cash flow remains consistent.

When the agreed transfer date arrives, the new firm will basically buy your sales ledger from the old firm and you will deal with the new company from then on.

Your customers will experience very little change as a result.