Whether you’re in line at your local grocery store, sitting in a doctor’s office or just looking to grab a bite at your favorite restaurant, we all have to wait.
In our modern world of instant text messaging, mega fast downloads and next day deliveries we’ve become a society that expects everything when we want it and the faster the better.
The same is true in the factoring industry.
How many websites (including yours truly) boast phrases like “Same Day Funding” or “Approvals in 24 Hours or Less”? Let’s face it, with almost any service provider, speed is king. The first question we usually get from new prospects is how long will it take for them to get funded. In most cases they expect to be funded in a few days or less. Brokers usually have the same expectations. Since the average invoice pays in thirty to forty-five days you can see their motivation to get their deals rapidly funded.
But who really controls how long it will take for a complete factoring approval?
The speed in which a deal gets initially funded is usually out of the control of the factoring company.
First, let’s start with the prospect.
Once the application has been completed and received, the factor will usually run some preliminary credit statements and other minor reports before they decide to proceed to the next step. This step usually involves the compilation of several documents including financial statements, tax returns, aging reports and any other piece of information that may be relevant in the evaluation process. This is where motivation comes into play. If the potential client really wants to get funded quickly they will promptly provide the requested information. Experience has taught us that gathering documents can take anywhere from a couple of days to several weeks. In defense of our prospects, many are small to medium sized businesses that sometimes outsource tax and accounting departments which they rely heavily on to get us the information. Our position has always been to keep the process moving forward by working with the information provided while waiting for the other requested documents.
Next is the client’s customer which we commonly refer to as the account debtor.
Our standard operating procedures require us to get all notice of assignments signed by both the client and the account debtor. Some factors prefer only to notify which is fine but we require full execution of the document. Some companies will sign the notice rather quickly while others, usually larger companies, will take forever to send it back. In many cases the notice is forwarded to the legal department of the account debtor where it collects dust until someone gets around to it. It’s usually at this point where we poke our prospect to contact their customer to get a full assessment of the situation.
Finally, you now have to verify the invoices your new client wants to factor.
This usually involves a different department of the account debtor which views the factor’s inquiries as more work for them. We’ve worked with some great accounts payable folks and others that were just an absolute nightmare. In my humble opinion this is the real nitty-gritty part of the factoring business that gets the most pushback. Fortunately, more companies are utilizing online accounts payable systems that allow us to log in and view both the approval and the expected date the invoice will be paid. It doesn’t get much better than that for verification.
So what is the real answer to the exact number of days for a full approval on a new client?
Nobody really knows for sure. Just keep the processes moving with hope that the folks on the other end are having a good day.
Don D’Ambrosio is the president of Oxygen Funding, Inc., an invoice factoring company located in Lake Forest, California.
For more information, he can be reached at don.dambrosio@oxygenfunding.com or you can visit his company’s website at
