Why Would Factors Need to Interact With Your Customers?
When you start working with a factoring company to factor your invoices, the factoring company will most likely reach out to your customers to inform them of this financing arrangement. You may have some concerns about the factor interacting with your customers during the factoring process.
However, there is no need to be concerned as factoring companies will not harass your customers. They will only reach out to your customers if necessary and all interactions will be conducted with professionalism. Factoring companies are businesses themselves; they understand the importance of customer relationship management.
Here are a few reasons why a factoring company would need to contact your customers:
Disclosure of Factoring Relationship
A Letter of Introduction is sent to your customers to notify them that you have entered into a factoring relationship and that a representative from the factoring company will be in contact with them shortly.
Update Invoice Payment Information
Following the Letter of Introduction, the factor will send a Notice of Assignment to your customers. This document informs your customers that the factor will be managing the invoice, where to send future invoice payments, and of other pertinent legal matters.
Confirm Invoice Details
Factoring companies will want to contact customers to verify the accuracy of invoice information. This is commonly done through email.
Confirm Payment Status
Factoring companies will reach out to your customers for an update on the payment status of invoices close to the payment due date. Once the factor receives a payment status, no further follow-up is usually needed. However, if a customer becomes unresponsive or defaults on payment, the factor will most likely follow-up again to ensure invoice collection.
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