There are certain clients that will not deal with you if they know you are dealing with a factoring company. Some of the factoring companies are known to be too aggressive with customers or not follow the payment terms that were originally agreed to. There are some that feel if you have to deal with a factoring company, you are not financially stable.
@Henry, I respect that this is how some may feel, based on their own direct experience, but there are counter-arguements to consider:
No doubt, some factors are sometimes too aggressive, but in my experience that's usually when the
customer is not respecting payment terms. If you think your factor is too aggressive, you should ask them to tone it down. If it were me and you asked me to buy an invoice with 90-day terms, I'd have lots of questions about
the customer's financial strength and why you'd choose to expose yourself to such risk.
Your second point about companies that factor being financially unstable is really hard to accept, though perhaps there is some truth in transport where I've seen gross margins of less than 10%. Factors should be more disciplined in accepting clients...if there is not a strong chance of revenues, margins and profitability will rise, we factors should decline the file, but I admit that most won't.