When your business relies on invoices for income every month, you know the stress that comes from customers being late with their payments. You won’t get paid until your customers settle their outstanding invoices. Depending on the customer, this could mean a month’s long delay in getting the money you need. So, what can you do to get paid in a timely manner? Invoice factoring helps you receive money quickly, but there are a few common mistakes you’ll want to avoid when getting started.

1. Not Reading the Factoring Agreement in Detail

Think of factoring as a type of short-term loan. You get access to the money you have tied up in invoices immediately and repay the factoring company when your customers pay you. The company itself charges fees and interest for the service and if you’re not careful, you could end up paying more than is fair.

Take the time to read the factoring agreement in detail before you agree to the terms. If you’re not sure about a clause or disagree with the terms, don’t hesitate to negotiate. Often, companies are willing to work with you, but they can’t do that if you don’t ask them to.

2. Not Factoring Invoices

When you factor invoices, you need to submit outstanding invoices to your factoring company. Make sure you’re sending the right documents over and not accidentally submitting purchase orders. The two are completely different and, though they result in customers paying you for your services, the factoring company won’t be able to issue money for those purchase orders.

Take the time to review every statement and document you’re sending out before you submit it to the company. This will spare you the frustration of delays in payment and helps the company process your loan more quickly.

3. Not Sending Payments to the Factoring Company

As a business owner, you have a routine. That routine is what makes it easy for you to get work done reliably and a large part of that routine is accepting payments and depositing them in the right account. When you factor invoices, you need to make sure to send the payments for those invoices to the factoring company.

Remember, invoice factoring is a type of loan. You get the money upfront, but you have to repay it plus any fees or interest as soon as your customers pay the invoice in full. Make a note of the invoices you’re factoring and send payment to the company as soon as possible.

If you’re going to use invoice factoring, make sure to avoid these mistakes at all costs.