How Many Factoring Price Quotes Do You Need?
How many factoring price quotes is enough? It is a difficult question and one that many prospective users of factoring struggle with. We often ask them how many they are looking for but the answer often varies. This article puts aside how to look at the differences between quotations and gives some helpful advice about how many factoring price quotes to seek in the first place.
When To Stop Looking For More Quotes?
Everyone wants to make sure that they are getting a good price that is competitive but to someone that is not familiar with the market place it is hard to know whether the quotes you have are representative or not. Getting a single quote is clearly open to the possiblity that you have picked the most expensive factor so that would suggest that more than one quote is preferable so that you can at least see if they are all in the same ball park. One might argue that if there is a wide spread between a handful of quotations that you have received, good practice would be to seek further quotations to ensure that you have sufficient representation from those that are at the keen end of the pricing scale rather than a single quote that stands out from the rest.
Factoring Price Comparison Sites
The rise of comparison type services in the financial services sector has also lead towards a culture of comparing numerous quotes but at the same time there remains an element of distrust even in using these comparison websites. Customers will go to comparison sites but will then use several of them in order to ensure, in their minds, that they are shopping around sufficiently as they are concerned as to how unbiased each site might be.
The factoring market could be said to be less complex than many financial services markets, having circa 90 companies offering such services in the UK, however there is still a need to ensure that you are receiving a representative sample of factoring price quotations.
Several of the reputable brokers within the factoring market provide a comprehensive service that includes support and advice throughout the process which is far beyond the service that you are likely to receive from a comparison site that compares only prices.
Research About Making Choices And Choice Overload
There is plenty of research published on the internet that suggests that when faced with any more than 6 choices, the large number of choices dramatically reduces the ability of most people to make a decision - resulting in choice overload. In our experience, we tend to find that most prospects seek 3 different quotation but that may increase if there is a dramatic swing in price between those that are received.
It is also important to consider who is providing the factoring quotations. If they are direct from factoring companies then 3 different quotations would seem like a reasonable number. However, a mistake that many prospects make is that they will speak to more than one factoring broker which results in repeating the process numerous times. Any truly independent factoring brokerage should have access to all the providers within the market and so should be able to source as many quotations as you wish from a cross selection of factors. If you can establish that the brokerage has no ties to any one factoring company you can use them as a conduit to access the number of quotes that you are seeking. It is not common practice for factoring brokers to charge any fees direct to you as a prospective client so this is another thing you should seek to avoid when selecting a factoring broker.
Summary - How Many Factoring Price Quotations?
So in summary, whilst there are no rules it would seem that 3 to 6 factoring quotations would be a reasonable number, either sourced direct from the factoring companies themselves or via an independent factoring broker with access to the whole factoring market.
