Factoring services can come in many different forms, but the essence remains the same for the most part. Instead of having to wait 30 days (or sometimes even more) to receive payment for the goods and services you’ve provided, you can get your money (or at least most of it) immediately. How quickly you get the money, the amount of money you get in advance, as well as the fees that the factoring company gets, will depend a lot on the particular situations unique to your industry. So if you are running a company that provides janitorial services, you need to look for janitorial factoring services.
While there are many factoring companies that offer financing to a wide range of industries, janitorial factoring services may be a better fit for your company because they already know details about the industry that other factoring companies don’t.
- You don’t have to explain your need for working capital. You know why you need the money and why you need it quickly. But does your factoring provider know? If they don’t, then they may take too long to provide you with the money you need and the advance may not be sufficient for your needs. Having to explain that you need the money to buy cleaning supplies and to meet the weekly payroll is a chore that you’re spared from, when you deal with a factoring service that’s already familiar with the janitorial service industry.
- Setting the factoring arrangement is a breeze. Every industry has its own way of doing things. But there can be some misunderstandings and screw-ups if the factoring service is unfamiliar with the business processes you work with. With an experienced factor, the setup is much quicker and more efficient. You don’t have to educate them, and they may even give you a tip or two on how to do things more efficiently.
- Experienced factors have realistic expectations. Some factoring services don’t understand why some clients of yours insist on paying in 60 days or more instead of the usual 30 days. They may then penalize you for their “lateness” in paying when in fact it’s just business as usual for these people.
- These factors can provide additional services. Janitorial services involve workers’ compensation. Generic factoring services have to be educated about this particular element of the janitorial industry. But janitorial factoring services not only know all about it—they may even know more about it than you do. You can then take advantage of their help when this particular issue comes up.
Moreover, the factor can also help you identify problematic clients. For example, if you have a new client then the factor can tell you about whether this new client pays their bills on time or not. You can also avoid new clients that already have a reputation of defaulting on their payments.
Working with a factoring service is a partnership, so make sure that the factor brings knowledge and experience to the table.