Do you really know what you are paying for your funding?
I wanted to take a minute to address something that’s bothering me. Nobody knows the true value of a dollar more than a business owner, right? Then why are we still not asking the right questions before signing a contract?
In the past two weeks alone, I spoke to owners from three different staffing companies that use a Funding company to help with their payroll costs. Sad to say, none of them could tell me what they were paying without referring back to their contract.
Upon reviewing these funding contracts, I find that these guys are actually paying more than double their “rate” listed in their contract.
Why, you ask? Because some (not all) banks and funding companies place hidden fees or minimum requirements in the fine print of these contracts. These companies are making a living on businesses that: 1. Enter into contracts without knowing the terms 2. Pay their invoices without questioning the amount.
All I ask is that you do not enter into a funding contract without asking these questions:
- Is the lender a bank that gives you the money directly or is it a company borrowing from a bank and passing their costs on to you?
- Do I have to use funding for all of my accounts receivables, or only for what I need?
- Are there minimum fees that I will be charged regardless of outstanding balance?
- How many years is the contract and are there clauses that automatically renew without my knowledge?
It could be costing your bottom line and you may not even know it! Please know that I am not with a funding company, so feel free to shoot me a message if you would like me to review your funding contract or just answer any questions you may have.