Candidly, funds are the backbone of any company for its smooth functioning. Sufficient working capital is always needed to meet the emergent expenses like payment of wages, transportation expenses, procurement of raw material and other day to day activities. Although financiers like Connecticut invoice factoring companies provide hard cash to the traders or manufacturing concerns against their pending invoices without much paper work, yet many people are afraid of approaching them.
It is the following unfavorable features of factoring service that is not preferred by many companies:
- Lack of legality –It is a fact that the financiers do lend certain amount of money to the traders against their unrealized invoices. But it does not involve any legal process whereas the banks and other financial institutions are bound to follow the set rules and other laws since incorporated by the state authorities. Thus the bills or invoices that are raised against the products or services remain protected under the law as regards loans from the banks or other money lenders but it may not be so in the case of financiers.
- No security– The hard cash that is availed by the traders or manufacturing concerns from the financiers is not covered under the state laws and as such it is not secure. The business houses may not be able to approach the state authorities if anything goes wrong with such a process since followed by the financiers. Some of such unscrupulous guys may promise huge money against the pending invoices but may not keep their word. That would create lot of problem for the company that hands over its invoices and repents. As such caution must be exercised in choosing the financiers that must enjoy great reputation in the industry. Better consult your near and dear ones before approaching any such concern that is engaged in providing hard cash against the unrealized invoices. Do search the newspapers, yellow pages or click on your mouse. Many of such companies post their company profiles through their individual websites. Just spare some time and have access to the reliable concerns that have earned good standing.
- No hard and fast rules– The process of availing ready cash from Connecticut invoice factoring companies or other similar entities does not involve any proper process that is legitimate under the law. As such it cannot be challenged in any court if any dispute arises at later stages. Many such dishonest companies may lure the needy guys by offering fewer fees for the ready cash. But as these transactions are not covered under the law; therefore it is suggested to approach only the reputed concerns. You can have access to their clients’ reviews that would be of great help in advising you in suitable manners. Do not ever run after low fee but pay attention to the worth of these financiers that may not dupe you in any case.
It is the above few unfavorable features that discourage the traders to make use of factoring service.