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The most common cause of lender fatigue in the factoring industry is broken promises. As a reference, and perhaps for chuckles, here is a short list of the most common broken promises:
- "I'll get you a copy of the documents you asked for by tomorrow...."
- "This won't happen again, I promise..."
- "I did not know I was not supposed to cash that check..."
- "I will send that check tomorrow, I promise..."
- "I need you to make an exception for me, again...."
Much like a dating relationship - broken promises, cheating and outright lies can land you in the dog house and prompt your factoring company to ask you leave. If your company is constantly breaking promises, asking for payment extensions and always making excuses you may be at risk of alienating your financing company with lender fatigue.
Having a factoring company terminate a relationship with your business can be a very challenging situation. Most will usually give you notice (based on your contract) so that you can look for a new company. However, your new factoring company will invariably ask you to explain why you are leaving your current factoring company. They may also ask for permission to speak to them - candidly and directly - as a condition to considering your company for financing. In many cases this will not bode well for your company. It may result in higher rates, lower advances - or being flatly declined.
How do you avoid causing lender fatigue to your factoring company? Simple:
- Be honest
- Keep your promises
- Don't take their money without asking
I though this would be a good subject for the opening article this year because many factoring companies review their portfolios at the beginning of the year, pruning invoice factoring clients that are just not worth the trouble. Believe me, it happens... and more often than you think.
