The California disclosure laws present unique challenges to factoring companies wanting to do business within the state. However, these challenges can be met with strategic responses. Here are some ways factoring companies can deal with the challenges presented with adhering to these laws:
- Invest in Compliance Infrastructure: Developing and investing in software that can automatically calculate and present the required disclosures in compliance with the law can make this transition seamless. However, since factoring is such a unique form of financing compared to traditional methods, a one-size-fits-all approach can be difficult. Factoring companies must be open to adaptation to do business within California.
- Educational Initiatives: Since factoring is different from loans, it’s imperative to educate those involved with the business transaction about the factoring process and why the annualized rate might not accurately represent the cost of factoring. Customers and employees who understand the difficulties these laws pose to factoring should have an easier time conducting business.
- Transparent Communication: These laws were created so financing companies do not hide crucial terms and conditions from their customers. To adhere to these laws, ensure your disclosures are presented in a clear, understandable manner. Avoid technical jargon that may cause confusion and use this as an opportunity to build trust with clients.
- Advocacy and Industry Collaboration: Factoring companies can participate in dialogue with regulators to help shape future interpretations and modifications of the law that recognize the unique nature of factoring.
If you’re a customer who’s been negatively affected by these California laws, contact Factor Finders today. We have connections to factoring companies across the country who have invested in themselves to ensure business can get done efficiently in the state of California. Don’t give up on your business. Factor Finders is here for you.