To ensure your business stays afloat, you need to have funds to cover any unexpected expenses, pay your bills and meet payroll demands. However, collecting client payments can usually be challenging and when you don’t get paid, you can easily run out of money. The good news is that factoring companies can provide you a big part of your invoice amount and collect your client’s payment. If you think this option is right for you, there are documents you need to prepare as factoring companies may request for them. They include the following:
Reports on Accounts Receivables
The factoring receivables transaction won’t be able to push through without this document. It details the current and recent invoices. The factoring company will use this to verify and identify your clients, how much they are owed and evaluate their creditworthiness. Clients that have a solid history of timely payments should be a good prospect. Together with this document, the factoring company may also request you to send a sample invoice to make sure it has the correct layout, readability and design. This can help them avoid future issues like a client refusing to pay because they cannot read the invoice properly.
Articles of Organization or Incorporation
The factoring company will request you to provide documents that identify your organization. This is like giving your ID to them. The company just wants to verify that your company is what it says it is and ensure the legitimacy of your business. This is an important to step to prevent a potential fraud and if you cannot provide this document right away, the transaction won’t speed up.
Factoring Application Form
You will have to complete an application form that will ask you to supply some information about your business. If you want the filing to be flawless, you can get the help of a factoring accounts receivable expert. You will find the expert dependable if you are new to factoring.
The requirements usually required by factoring companies differ by companies. Other factoring companies can ask for additional documents, such as banks statements. Also, a number of factoring companies are likely to ask for most recent tax returns while others aren’t. Requirements may differ depending on your state and local laws. Providing what they are requiring from you is paramount to get approved. Make sure you choose a reputable factoring company so that your business and even personal details are secured.
