The Difference Between General and Specialized Factors
Some factoring companies are general and handle invoices in a wide range of industries.
Others specialize only in certain industries or certain types of invoices. Some specialize in the garment industry; some in service industries such as staffing agencies; and so on. Along with specialization, you may find that some factoring companies exclude certain types of transactions or industries.
So why the specialities and exclusions? Sometimes it’s because of special legal requirements in those industries that may involve greater due diligence. Some factors simply are not prepared to handle certain industries if it means specialized due diligence or procedures — they leave it to the specialists.
Take, for instance, the following two examples of specialized invoices:
Construction Industry – In the construction industry suppliers and subcontractors to a project often have special lien rights until they get paid for their work (e.g., mechanics liens). Unless a factoring company is familiar with lien laws in your state, it may not be prepared to get involved.
Federal Government Contracts – When it comes to Federal contracts, a special law applies to assignment of those contracts: The Federal Assignment of Claims Act (31 U.S.C. §3727 and 41 U.S.C. 15). This Federal law imposes specific requirements on factoring of receivables, including special notifications and sign-offs by government officials. A factor that doesn’t see many government invoices may not be equipped to deal with the special requirements.
Many factors, such as Facteon, are general rather than specialized. They cover a wide variety of industries.
The best thing is to just ask. A phone call takes just a few minutes. The factoring representative will tell you immediately when you call if they can handle your type of transaction. Look, they don’t want to waste your time or theirs.
Facteon handles most types of transactions, with just a few exceptions. Pick up the phone and call 888.673.3863 (or have them call you) and you’ll learn immediately whether your type of transaction is eligible.
