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Factoring Companies Granting Credit in US drives the economy

Date Added: March 26, 2013 01:22:37 AM

The allure of credit cards. What a way to boost spending in an economy. In Q2 of last year, the total credit card debt was $799 billion. Credit cards are part of the American mentality. When a student graduates from college, on average, he or she already has $2000 in credit card debt. The average American has $3,000 in credit card debt and not one, but two cards. Granting credit is in our DNA.

For receivables factoring company, credit and debt is their business. And when a business grants credit terms to a customer, in a way, it's like giving them a credit card.

There are many advantages to extending credit. First, companies, just like individuals, tend to spend more when they have credit. That's good for your business (unless they don't pay or decide to take their time in paying, then that bright spot could be a sore spot for your business). In fact, many companies accept payment by credit card. It's not a bad way to go - you get paid quicker and again, the customer may buy more because it's they are not pulling dollar bills out of their pocket or writing a check right then and there. But when a business extends credit terms to another, there's should be a huge system in place behind that decision to check the creditworthiness of that client.

Invoice factoring companies have a variety of tools we use to check and monitor customer's credit ratings. They include Dun and Bradstreet, Experian, Coface & Cotera and others. They not only check the credit ratings, but we manually monitor those credit ratings every 90 days. This is key, because a customer might look great financially one day, the day you extend them credit, but quite a bit can happen in three months. They provide this information to our clients at no charge so they can see the status of their customers as well.

Sure, credit makes the world go around. You have given some of your customers the green light. You just want to make sure they are staying on the right road to honoring that privilege you extended to them.  You can do that with proper monitoring techniques.