Start With the Needs of Your Business
A useful comparison begins with the receivables and operating process the provider would actually review. Write down the customers, invoice types, expected volume, funding pattern, and level of account support the business needs.
Industry and Customer Profile
Ask whether the provider has experience with the business's industry, customer types, contract practices, documentation, and payment process. Relevant experience can make questions easier to identify, but it does not guarantee approval or terms.
Funding Pattern and Expected Volume
Describe when invoices are issued, how customer payments typically arrive, whether volume changes seasonally, and how much reporting or funding activity the business expects.
Service, Reporting, and Technology Needs
Decide which account support, reporting frequency, document exchange, portal access, and customer-communication practices are operationally important before comparing providers.
Confirm the Provider's Relevant Experience
Industry Familiarity
Ask what types of transactions and receivables the provider commonly reviews, what documentation it expects, and which aspects of the business may require additional explanation.
Customer-Credit Approach
Ask how the provider reviews customer credit, establishes customer limits, handles concentration, and responds to changes in a customer's payment profile. The provider's actual underwriting standards control.
References and Reputation
Seek references or independently verifiable information relevant to the proposed relationship. Ask references about communication, settlement statements, dispute handling, and ending the relationship—not just initial funding.
Experience With Similar Invoice and Customer Profiles
Compare whether the provider has reviewed similar payment terms, customer locations, assignment restrictions, delivery records, or verification requirements. Record the answer rather than converting it into a provider ranking.
Compare the Complete Economic Structure
Advance and Reserve Mechanics
Record what the stated advance applies to, how the reserve is calculated, when funds are released, and which deductions can reduce the final settlement.
Total Cost Rather Than the Headline Fee
Compare the complete fee formula, timing rules, additional fees, minimums, reserve adjustments, and termination charges using the same invoice and payment assumptions for each proposal.
Minimums and Additional Fees
- Record monthly, minimum-volume, account-maintenance, unused-facility, or minimum-fee requirements.
- Ask about setup, due-diligence, verification, processing, wire, lockbox, legal, filing, renewal, and termination charges.
- Confirm which charges are deducted from reserves and when the provider may change them.
Recourse and Non-Recourse Options
Compare the actual risk-allocation provisions, covered credit events, exclusions, timing requirements, disputes, dilution, repurchases, and chargebacks. Product labels alone are not enough.
Understand Credit, Eligibility, and Concentration Policies
Customer Credit Limits
Ask how customer limits are set, reviewed, communicated, and changed. Confirm whether an invoice can be funded partially or become ineligible after a limit changes.
Concentration Restrictions
Ask how one customer or related group representing a large share of receivables affects availability, reserve treatment, approval, or documentation. Do not assume a universal concentration threshold.
Eligible and Ineligible Invoices
Compare treatment of completed work, progress billing, disputed invoices, credits, returns, foreign customers, related parties, assignment restrictions, and previously pledged receivables.
Verification Procedures
Ask who verifies invoices, which records or customer contacts are used, how exceptions are resolved, and what the business must do when a customer cannot respond.
Evaluate Funding and Account Operations
Submission and Approval Process
Document the submission steps, required records, approval decision-maker, conditions to funding, and process for correcting an invoice or supporting-document issue.
Funding Procedures and Timing
Ask what the provider means by funding availability, which steps must be completed first, and how weekends, holidays, verification questions, or incomplete documents affect processing. Do not rely on unsupported universal timing claims.
Customer Payment Handling
Confirm whether customers receive notice, where payments go, who handles payment questions, and how misdirected payments, disputes, credits, and returned payments are recorded.
Reserve Releases and Reconciliations
Ask how often settlements are prepared, what the statement shows, which deductions are itemized, and how a business can challenge an apparent error.
Compare Service, Communication, and Technology
Day-to-Day Account Support
Identify the people or team responsible for routine questions, invoice exceptions, customer disputes, settlement questions, and changes in the account.
Communication With the Business
Ask how the provider communicates approvals, declines, limit changes, reserve deductions, policy changes, and required actions. Record the agreed channels and escalation path.
Communication With Customers
Understand who contacts customers, what notices say, how the business remains informed, and how customer relationships are handled during verification and collection.
Portal, Reporting, and Document Capabilities
Compare the ability to submit invoices, view approvals, download settlements, monitor reserves, exchange documents, and obtain an export suitable for the business's records.
Review the Contract Before Selecting a Provider
Contract Length and Renewal
Record the initial term, automatic-renewal language, notice deadline, and any change in pricing or obligations at renewal.
Minimum-Volume Obligations
Confirm the measurement period, shortfall charge, exceptions, and how the obligation interacts with seasonal or uneven receivables.
Termination and Notice Requirements
Compare who may terminate, required notice, early-termination charges, settlement of outstanding invoices, reserve release, and lien-release procedures.
Security Interests and Guarantees
Ask what collateral, UCC filings, personal guarantees, reporting, or restrictions on other financing may apply. A qualified adviser should review legal consequences specific to the business.
Provider Comparison Worksheet
Use one column for each provider and record factual answers, document locations, and follow-up questions. The worksheet is for organization and comparison; it does not assign scores, weight criteria, calculate a winner, rank providers, or label a provider best.
| Comparison area | Provider A | Provider B | Follow-up or document reference |
|---|---|---|---|
| Relevant industry and customer experience | Record factual response | Record factual response | What should be verified? |
| Customer-credit and concentration approach | Record limits and process | Record limits and process | Where is it documented? |
| Advance, reserve, and eligibility | Record terms | Record terms | What conditions apply? |
| Fee formula and additional charges | Record complete method | Record complete method | Which assumptions were used? |
| Recourse, coverage, and chargebacks | Record provisions | Record provisions | What exclusions need review? |
| Funding, payment, and reserve operations | Record process | Record process | Who handles exceptions? |
| Contract term, renewal, and termination | Record provisions | Record provisions | Which deadlines apply? |
| Service, reporting, and technology | Record capabilities | Record capabilities | What can be demonstrated? |
Before comparing proposals
- Use the same invoice, customer, payment, and volume assumptions where possible.
- Request the complete agreement and every referenced schedule.
- Record unanswered questions rather than filling gaps with assumptions.
- Separate factual differences from personal preferences and business priorities.
- Review legal, accounting, and financial questions with qualified advisers.
Questions to Ask Each Factoring Company
Questions About Economics
- What is the complete fee formula and what additional charges may apply?
- How are advances, reserves, minimums, and customer limits determined?
- How are disputes, credits, offsets, chargebacks, and repurchases settled?
Questions About Credit Decisions and Operations
- Who makes customer and invoice approval decisions?
- What verification and documentation are required?
- How are limit changes, exceptions, and customer-payment issues communicated?
Questions About the Agreement
- What are the term, renewal, minimum-volume, notice, and termination provisions?
- What UCC, security-interest, guarantee, reporting, or other obligations apply?
- Which representations in the proposal are included in the written agreement?
Questions About Service and Customer Interaction
- Who is the day-to-day contact and who handles escalations?
- How are customers notified and how are their questions handled?
- What portal, reports, settlement statements, and document tools are available?
How an Independent Broker May Assist
LIEquity's Role
LIEquity is an independent commercial factoring broker. It may help a business explore potential factoring options and organize questions for provider discussions.
Decisions That Remain With the Factoring Provider
The factoring provider makes credit and approval decisions, purchases eligible receivables, sets final terms, establishes customer limits, and determines any credit-risk coverage under its agreement.
Why No Provider Is Universally Best
A suitable arrangement depends on the business, its customers and invoices, operational needs, economics, risk allocation, and complete contract terms. No provider is universally best, and this guide does not rank providers or imply an exhaustive market review.
Frequently Asked Questions
What should I compare between factoring companies?
Compare relevant experience, customer-credit approach, eligibility, advance and reserve mechanics, complete cost, recourse, verification, funding and payment operations, service, technology, reporting, and contract flexibility.
Is the factoring company with the lowest advertised fee always the least expensive?
No. The complete comparison may include timing rules, reserve treatment, minimums, transaction charges, chargebacks, termination costs, and other obligations. Use the full agreement and consistent assumptions.
Does industry experience matter when choosing a factoring company?
Relevant experience may help a provider understand an industry's documentation and payment practices, but it does not guarantee approval, pricing, or suitability. Ask what experience is actually relevant to the proposed transaction.
Should I compare recourse and non-recourse options?
Yes. Compare the actual covered events, exclusions, timing conditions, disputes, dilution, repurchases, chargebacks, and costs rather than relying only on the recourse or non-recourse label.
What questions should I ask about customer communication?
Ask who sends notices, where customers pay, who handles verification and payment questions, how disputes are communicated, and how the business is kept informed about customer interactions.
Can LIEquity guarantee the best factoring company, rate, or terms?
No. LIEquity is an independent commercial factoring broker and does not guarantee the best provider, rate, approval, or terms. The provider makes approval decisions and sets final terms.
This resource provides an educational framework for recording factual differences among potential providers. It does not rank providers, score or weight criteria, calculate a winner, label a provider best, or imply that LIEquity has evaluated every factoring company in the market. LIEquity is an independent commercial factoring broker; it does not provide factoring, lend money, purchase receivables, approve invoices, make provider credit decisions, set final terms, determine credit-risk coverage, or guarantee the best provider, rate, approval, or terms.