When I use factoring services, where does my customer send the payment
and who is the payment written to?
The payment is mailed to the Factor, and the check is written
to the Factor. The Factor is the collector of the payment.
How will my customer know to send the invoice payment to the Factor?
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?
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
How does the Factor treat my customer? How do they present themselves
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.