The simplicity of invoice factoring financing often gives merchants the opportunity to extract more money from businesses. Business owners interested in factoring their invoices often end up paying more than what they are supposed to. This is made possible with the help of various hidden fees which merchant can try including in the processing of invoices.
Some additional fees that can be charged beyond the discount rate are:
Application fees – A business owner is required to fill out an application describing all the details of the company, details of invoice, and client info. While this process generally requires no additional charges, spammy companies make it mandatory for their customer to pay this amount when they are looking for factoring their invoices.
Overdue fees – Often merchants charge you an overdue fee for those clients whose payments are not yet cleared. Since there is already an unpaid invoice with the client, companies take this opportunity to include another malicious fee.
Credit check fees – During preliminary approvals and verification process, clients run a background check on you as well the client on whose name the invoice was issued. A credit check in another responsibility of the factoring company and no money is charged in the process.
Mailing fees – For all mailing and document related work, companies also try to include mailing fees. If the factor contacts your clients and follows up for payment, you are not liable to pay any charges whatsoever. There are no mailing fees associated with A/R financing.
If you are charged with these or related fees anywhere else, it means you are not at the right invoice factoring financing corporation.
The only fee associated with factoring is the processing fee, which generally is 1-5%. Although there are a lot of determinants in case of factoring, the processing of this method is very simple and fees is one. Other than that, there are no significant fees that discount invoicing companies charge their customers with.
Watch out for these fake features and make sure that your company is not among the ones where unnecessary fees pile up as most fees should be paid after funding is working smoothly, not before funding starts. Authentic companies understand your business and, therefore, asks you for the processing fees only. Keeping all things similar, you need to make sure that you get the maximum out of your invoices. Go for companies who offer simple, transparent pricing with no or zero hidden fees.
In 1985, 1st PMF Bancorp was founded as a family run lender providing factoring, but as our clients’ businesses expanded globally, PMF Bancorp expanded its services to provide credit and financing support for our clients domestic as well as international business needs.