6 questions to ask every factoring funder

Ask all six of every funder, in writing where you can. Write their answers in the space under each one, then compare.

1. What's the rate, how many days does it cover, and what's my advance?

   Why: the rate alone tells you little. 2% for 30 days with a 90% advance is a different deal from 2% for 15 days with 80%.
2. If my customer pays a few days late, do you charge me for a whole extra month?

   Why: counted by the month, day 31 starts a new fee. Counted by the day, 8 late days cost 8 days. On a $50,000 invoice that's $733.
3. Is your fee on the full invoice, or only on the cash you give me?

   Why: 2% of $50,000 is $1,000. 2% of the $45,000 you actually received is $900. Same rate, different bill.
4. What do I pay besides the discount fee? Please send me the full fee schedule in writing.

   Why: wires, credit checks, monthly service or lockbox fees, setup, unused-line fees. None show up in the rate.
5. What do I owe in a slow month, and what does it cost to leave early?

   Why: a $50,000 monthly minimum means you pay for $50,000 even in a $20,000 month. Exit fees and auto-renewals decide how stuck you are.
6. What's my all-in cost on this one invoice, including every fee?

   Why: the only number you can compare across funders. A lower rate with a service fee can cost more than a higher rate with none.