Yesterday I read an article online about how great invoice factoring can be. The article warns business owners to confirm all the cost details associated with the factoring advance. It suggests verifying the following potential fees:
- Application fee
- Due diligence fees
- Credit reporting fees
- Background or lien search fees
- Factoring company lock box fees
- Minimum monthly volume fees
- Charges to add a new receivables factoring client
- Early termination fees from receivables factoring contract
- Upfront advance fee and then an interest fee
- Fee for same day advances
- Monitoring fees
- Automated clearing house (ACH) fees
- Wiring fees
One of the biggest advantages to a business cash advance, compared with invoice factoring is the fact that there are no hidden or associated fees like the fees typically associated with invoice factoring. A business cash advance is a type of factoring (credit card factoring) but does not require the in depth accounting to determine advance amounts and is far more simple to fund – with automated repayment based credit card sales.
If your business accepts credit cards, a business cash advance (or credit card factoring advance) may be preferred for its simplicity and lack of associated fees.