Johnson negotiated with five factors before choosing Oxford. The small business owner also says that using a factor doesn't have to be more expensive than getting a bank loan. In the case of Sun Nurse, Johnson's company builds the fees that Oxford charges into its own pricing structure. While factoring can be a great financing vehicle, many business owners don't share Johnson's enthusiasm for this type of capital. That's because factoring carries a certain stigma.
Many people mistakenly believe that a company using a factor is going down the tubes.
That's a perception that factors have been battling to change. The stigma surrounding factors is falling away, but slowly. That's one reason why you may want to set up a factoring arrangement on a non-notification basis. That means your customers will not be told that their accounts have been sold and will be none the wiser about you using this form of financing. Keeping in mind these caveats, factoring is a great form of financing for small business owners who are shut out of more traditional means of raising money or who just don't want to take on debt or sell shares in their companies.