How to switch factoring companies

The steps

1. Find your term, renewal window and exit fee. Many agreements renew on their own unless you cancel 30 to 90 days before the end. Missing that window can lock you in for another term.
2. Get the competing offer first. Compare it in dollars against what you pay now, including minimums and fees, not just the rate.
3. Give notice the way the contract says. Usually in writing, sometimes by certified mail. Keep proof.
4. The new funder buys out the old one. It pays off the advances on your open invoices, the old funder releases its lien and returns what's left of your reserves.
5. Your customers get new payment instructions. The new funder handles the notices. A short note from you helps keep things smooth.

Avoid a funding gap

Line up the new funder before the old agreement ends, and agree on a payoff date with both. That way invoices you create during the switch still get funded.

Is it worth it? A quick check

If you factor $50,000 a month and a new offer saves even half a point per 30 days, that's about $250 a month, or $3,000 a year, before any minimums or fees you'd drop. Weigh that against any exit fee.

General information, not legal, tax or accounting advice. Every funder and contract is different. Examples use made-up numbers.