When I use factoring services, where does my customer
send the payment and who is the payment written to?
A. The payment is mailed to the Factor, and the check
is written to the Factor. The Factor is the collector
of the payment.
Q. How will my customer know to send the invoice
payment to the Factor?
A. When you open a factoring account, your company will
send a letter to your customer identifying the factoring
company and ask to accept their requests for payment on
your behalf. Afterwards, the Factor will subsequently
send letters to your customer asking them to redirect
payment for each invoice you choose to factor.
What will be the impact on my customer, and how might
it change our existing relationship?
A. The only difference to your customer is where to send
the payment and who the payment is made out to. In fact,
your customer relationship will most likely improve with
factoring services. You no longer have the uncomfortable
task of collecting payment from your customers, the Factor
will now assume that role as an independent third party.
Now you can keep your conversations with your customers
strictly about business and leave the topic of collecting
payments to the Factor.
Q. How does the Factor treat my customer? How
do they present themselves and communicate?
A. The Factor treats your customer with the utmost business
professionalism and presents themselves as an accounts
receivables management service that has just given your
business an unlimited credit line. After all, the Factor
has a vested interest in your customers satisfaction and
would never want to do anything to upset them and loose
their business (and yours). The Factor communicates to
your customer through letters and telephone calls. The
letters ask your customer to redirect invoice payments
and the phone calls are only to verify the existence of
an invoice. Should your customer begin to default on payments
the Factor will raise the issue with you first before
speaking to your customer.