Be Mindful of these 3 Factoring Agreement Fees - Crown Financial

You have searched high and low for the best invoice factoring company in Houston, and have now settled on one. The contact is in hand, but do you know how to evaluate it?

When you receive a factoring agreement, it is important to understand the fine print. Where are the fees? How much am I getting upfront? These are important questions to ask. Let’s take a closer look and some of the details to be aware of in your invoice factoring agreement.

Many companies will bury the fees and nickel and dime you, making it unclear whether or not you are really getting the most money for your invoices. Here are a few fees to understand when reviewing your factoring contract:

  • Monthly Fees: Maintenance fees, lockbox fees, etc. are monthly fees on the amount factored. These are important to consider in the bottom line. The monthly fees may not seem like much, but be wary of these fees adding up. They can easily add up to an additional 2-5% in fees.

  • Origination/Draw Fee: Origination fees – or draw fees – are a flat rate fee that is assessed per invoice. A typical advance rate for factored invoices is 85%. If you are charged a 1% origination fee, then your net is really just 84%. Be mindful of these small fees that add up quickly.

  • Termination Fee: Some contracts have a guaranteed length of time to which you will be working with your invoice factoring company. Be aware of when that date is, and be sure you understand all fees associated with cancelling services before that date. Many companies will charge a termination fee, which is normally a percentage of your line of credit.


Need an honest, reputable invoice factoring company with 25 years of service under their belt? Call Crown Financial in Houston, Texas today. We will walk you through each step of the factoring agreement so you know what you are getting into before you ever sign anything. 

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