FTrans is addressing an issue which keeps many banks from participating in receivable factoring and that is evaluating the invoices being presented for factoring. The article mentions that most banks are not set up to monitor and evaluate the invoices presented for factoring. The way it works is that a company seeking to receive a line of credit from its bank posts its invoices on FTrans. The invoices are evaluated and confirmed and the bank then has the information it needs to determine whether to provide financing against these receivables.

What FTrans does, essentially, is to open the door to banks to pitch another service to their business customers without having to staff an entirely new department. Based on the feedback provided by FTrans, the bank determines what percentage to advance against the invoices and what fee to charge.

This goes back to some of my earlier comments that banks are taking notice of the amount of business out there for receivables factoring. Companies like FTrans are making it easier for them to become involved which just increases the amount of competition for the factoring industry.

Next up… how smaller companies can get lower rates on their receivables financing.