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Step 1
Select a few companies that offer factoring services and check out what percentage of your accounts they want to take. Rates vary from 1 to 5 percent and advances vary from 65 to 97 percent. There is a big difference in services, so select the best one for you (see Resources below).
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Step 2
Set up an account with a factoring company. The nicest thing about factoring is your credit isn't on the line; the person who owes you the money has his credit on the line. Therefore, new businesses can use factoring services as easily as established businesses.
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Step 3
Assign your accounts receivable to the factoring company. Once the factoring company approves you, pick the accounts you want to assign to them. It doesn't have to be all of your accounts, although it can be.
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Step 4
Decide for yourself how often you want to use factoring services. Once everything is established, you can use the factoring service once or as many times as you want. Don't worry if you use it today and then wait 2 years before you use it again. Factoring is a big industry and you can use it as you see fit.
