What criteria should I consider before choosing a factor?

There are two types of factor: high street banks offering invoice finance to business customers and specialist factoring providers.  Choosing the right factor is vital in setting up a profitable and beneficial factoring agreement. The first step is to ensure that any factor you are considering is a member of ABFA (the UK trade association for invoice finance), as members must comply with stringent industry codes. Following this you will want to consider the following: Reputation and proven trading history, especially in your industry, track record in quick and efficient debt collection, what credit limits will be set, the percentage being offered as a cash advance, fees and commissions being charged (including start-up or arrangement fees), contract length, qualifying requirements such as minimum turnover or number of clients and information on how they communicate with your customers and collect debts if setting up a disclosed arrangement.