It’s no secret that every industry has needed to grow, adapt and change over the last few years. And factoring is no exception: with issues like quickly changing debtor payment habits, sophisticated fraud and tighter margins, factoring companies have needed to change quickly.
Let’s face it: traditional underwriting and risk management strategies just aren’t enough for modern factoring companies. And in our recent webinar, held in partnership with the International Factoring Association, industry leaders from Creditsafe, Decipher Credit and FactorEvo explore just how factoring companies can conquer debtor risk and underwriting hurdles with the help of clean data, automation and new technology.
Table of Contents
- Debtor risk is harder to manage than ever
- Why AI matters to factoring companies
- Continuous underwriting is key for factoring success
- Factoring companies are nothing without clean data
- Fraud is getting smarter: factoring companies should too
- Bridging the gap between sales and underwriting
- What factoring looks like in 2026 and beyond
Debtor risk is harder to manage than ever
Debtor risk used to be pretty static. Credit profiles used to change quarterly, or even annually, so factoring companies were able to make calls based on payment behavior and financial health profiles that weren’t going to change overnight. But today:
- Payment behavior can shift within days
- Fraud schemes evolve in real time
- Industry stress shows up before financial statements do
- Legacy systems fail to connect signals across data sources
As Nick Foley, New Business Acquisition, Enterprise at Creditsafe emphasized, changes in payment behavior, like a fluctuating Days Beyond Terms (DBT) or stretched payment cycles, can emerge in as little as 5–14 days. And your business can take notice of these red flags much more closely when data is monitored continuously rather than monthly.
The implication for your factoring company is clear:
Monitor risk continuously, not periodically.
Why AI matters to factoring companies
Today, we're firmly in the Agentic AI era. AI systems behave less like tools and more like specialized team members. Factoring companies can use them to scale operations without adding to workloads and overburdening teams.
Agentic AI refers to AI “agents” that perform specialized tasks independently while coordinating with one another.
Think of it like a digital underwriting team. Like we discussed in our webinar, factoring companies could use AI “agents” to:
- Read and analyze financial documents
- Monitor debtor payment behavior
- Verifying identities and bank data
- Managing confirmations or compliance checks
But don’t start worrying about the robot takeover just yet. These agents don’t replace human judgment. Instead, they:
- Remove hours of manual data entry
- Flag inconsistencies early
- Surface risks before exposure materializes
- Allow underwriters to focus on analysis, rather than paperwork
As Robert Vasquez of Factor Evo put it, agentic AI “doesn’t think for your team: it thinks with your team.”
Continuous underwriting is key for factoring success
One of the most important shifts we discussed in the webinar was the move from static underwriting to continuous underwriting.
Traditional, static underwriting:
- Is performed at onboarding and rarely or never again
- Relies on snapshots of data from a single point in time
- Is slow to detect behavioral changes
- Leaves blind spots fraudsters can exploit
Meanwhile, continuous underwriting:
- Monitors debtors in real time
- Integrates internal and external data
- Detects early warning signals
- Adjusts risk appetite dynamically
Early warning signs of a faltering company, like deteriorating payment trends, rising disputes, or legal filings, need to be caught as soon as they appear. Often, they’re the difference between protecting cash flow and reacting too late.
Factoring companies are nothing without clean data
AI is powerful, sure, but your company is still only as powerful as the data it relies on. If the data feeding your AI or automated systems isn’t reliable, accurate and up-to-date, the decisions you make can never actually help your company grow. In fact, it could just speed up the process of unreliable, fraudulent, or harmful businesses.
As our webinar panel reminded us:
“Junk in, junk out still applies.”
So how do you make sure your data is as clean and helpful as possible?
- Go directly to the source
- Integrate data directly into your CRM to make sure you never miss any changes or updates that could be relevant to your business
- Avoid rekeying data
- When you pull and refresh data automatically, you decrease the chances of human error that muddies the waters of your credit risk data
- Cross-reference information
- Compare your internal data to a source of credit truth that you can use to verify what you think you know about customers
- Verify documents
- Make sure you don’t fall for scams by always checking documents against master contracts or confirming details in person
- Keep data fresh
- Use an API to integrate data. Having data being constantly refreshed in the background means you’re always working off of the most up to date information possible.
Clean data is what allows AI to detect early delinquency signals, predict behavior and flag fraud patterns: before it gives you any problems.
Fraud is getting smarter: factoring companies should too
Fraudsters are also using AI. Between voice cloning, deep-fakes and other sophisticated fraud attempts, factoring companies can’t leave anything up to chance. According to the 2025 AFP Payments Fraud and Control Survey Report, 79% of US organizations were victims of payment fraud attacks or attempts in 2024.
Robert and Raul talked about several types of fraud factoring companies see every day, like:
- AI-generated driver’s licenses
- Fake selfies passing basic checks
- Altered bank statements and PDFs
- Sophisticated identity spoofing
So what can your company do to prevent it? Here were a few of their suggestions:
- Use biometric verification (ID + selfie analysis)
- Connect directly to bank accounts
- Validate signers and ownership
- Analyze inconsistencies across documents and systems
- Monitor behavior after onboarding -- not just before
Fraud prevention can’t be a “set it and forget it” one-time process. With the speed of technology, your business needs to think like a fraudster and make sure you’re always one step ahead of fraud attempts.
Bridging the gap between sales and underwriting
As our panel said, sales has always moved faster than underwriting. But the process of chasing and nurturing leads just one part of the equation. On the other side, underwriting needs to carefully monitor and analyze credit risk data to determine whether a deal can go through. That gap creates friction – not to mention lost deals.
When teams use automation and integrated data, your business can finally align both sides. Here’s how:
- Pre-underwriting signals
- Flag weak deals before underwriting time is wasted
- Automated financial analysis
- Balance sheets and P&Ls summarized in plain English
- Standardized scorecards
- Every debtor evaluated consistently
- Faster credit memos
- AI drafts write-ups for committees
- Shared visibility
- Sales understands risk early; underwriting gains speed
The message from our panel was clear: when sales and underwriting share data and stay on the same page, deals move faster. Plus, those deals are better for your business.That’s a pretty win-win situation, if you ask me.
What factoring looks like in 2026 and beyond
Our panel is good, but they don’t have a crystal ball. Even so, we discussed what Nick, Robert and Raul thought the factoring industry would look like as we move into the new year – and beyond. They predicted:
- Less data entry, more analysis
- Lower default rates through early detection
- Faster funding without sacrificing controls
- AI-assisted teams, not AI-replaced teams
- Network-level intelligence instead of isolated views
The goal is to turn underwriting teams from data processors into true analysts. And with the help of automation, integrated data and AI, that’s easier than ever.
Give your team access to better, fresher credit risk data.
Let's talk about how you can integrate Creditsafe data.
About the Author
Ragini Bhalla, Head of Brand and PR, Creditsafe
Ragini Bhalla serves as Head of Brand for Creditsafe. She brings our industry-leading data to the forefront of global conversations about credit risk, compliance and larger economic trends.
Chapter 1