Getting payments as soon as you deliver your load is next to impossible in the trucking business. It’s already part of the industry standard.
What if we tell you that there’s a way to get around this hassle?
What you need is a company that will basically buy your invoices from you. They convert outstanding invoices due within 90 days to cash that you can immediately use.
However, not all of these companies are a perfect match for every trucking business. You need to screen which of them are good candidates to partner with.
Here are five questions you could ask to determine the best invoice factoring company for your business.
1. How Experienced Are They in the Business
Even if you’re new to the trucking industry, that doesn’t mean you should partner with a new company that offers freight factoring services. It’s more important that you choose a partner who has extensive experience.
Cross out companies established within the last five years. New factoring company freight does not mean they’re bad, It’s just safer to partner with those who know the industry well, allowing you to get better funding options.
2. How Flexible are the Terms They Offer
If you’re planning to enter a long-standing contract with a company that offers a factoring service for trucking, you need to make sure that you’re given flexible rates.
The best approach is to get an invoice funding contract that allows you to specify the clients you’d like to factor. You certainly don’t want to incur fees on clients who are willing to pay you quickly.
3. What is the Factoring Company’s Reputation
When you start searching for a factoring company to partner with, don’t be surprised by an abundance of choices. Asking them about their reputation will only get you the most positive of reactions.
Visit their websites and look for the page with customer testimonials. Most companies have social media accounts. This is where you’ll get an unbiased review from their existing customers. It will also give you an overview of how they take care of their clientele.
A quick way of pruning bad companies from your list is to check their affiliations with certain associations. International Factoring Association (IFA) members follow strict standards in providing quality trucking factoring services.
4. Do They Additional Incentives
Fueling your trucks is a big part of your operational expenses, so if you can get a fuel discount from a factoring company freight it will surely help you with your cash flow. Some programs even provide funding when you pick up and load.
Remember that the essence of what you’re looking for lies in which factory company freight can help you run your business smoothly. While having a fuel program is not a must, it’s very useful to small carriers who are low on funds.
Another type of incentive some factoring companies offer collection services on your unsettled invoices. They can provide assistance to collect payments that are long overdue, freeing you from the stress of chasing the delinquent customers down.
Online services are a big plus when choosing a factoring company. Some even have a mobile app to help you with back-office tasks such as collections and billing.
5. Do They Offer Non-Recourse Factoring
A recourse factoring makes you accountable at the end of the day if a customer doesn’t pay up. They’ll do what is necessary to collect but if the customer doesn’t pay up, you’ll have to take responsibility instead.
A non-recourse factoring, on the other hand, removes the risk of bad debt from you. If your customer doesn’t pay up, the factoring company freight will take all the brunt for you. In extreme cases that your customer filed for bankruptcy, you won’t even be bothered to stand in court.
The only caveat with non-recourse is that your service shouldn’t be the reason that the customer is not paying up. If you’re focused on providing the utmost service to your customers, you don’t have to worry about this limitation.
Choosing the Right Factoring Company to Partner With
These five criteria will help you to vet out those factoring company freight that is not a perfect match for you. In a nutshell, what you want is a partner that has a good reputation and well-experienced in providing trucking factoring service.