When you are looking for the best trucking factoring companies for you, there is loads of information and research that you are going to want to consider when you are weighing cone company against another. It is important to make sure that you find a company that not only understands the incredible importance truck factoring holds to the success of your business and pays a lot of attention and care to make sure that they are doing everything they can to help you find success.
Overall, the prime benefit of truck factoring companies is that they allow professionals like you to have a consistent flow of cash to make sure that your business not only succeeds, but flourishes and grows!
Within the industry, truck factoring is also commonly referred to as transportation factoring and is one of the primary financing options for businesses that depend on trucking companies to succeed.
If you are considering utilizing truck factoring to keep your business growing and thriving, here are some of the top things that you should be looking for in each and every company you consider.
What is truck factoring?
The truth is that you probably already know what truck factoring is if you have found yourself here, but just in case you are not positive, let us quickly break it down for you here.
Overall, truck factoring provides a way for companies to receive money for unpaid freight bills. It is the preferred method because it allows companies to get paid instantly without waiting weeks for your customers to fulfill their invoices. It is actually the most common choice for a lot of companies to ensure that they receive a steady flow of cash to haul loads in order to keep your business growing and thriving.
In other words, truck factoring companies will pay 95% of the unpaid invoice with immediate cash in your hands and they will put the effort into collecting that amount from your client.
When it comes to working with truck factoring companies, one of the most important things to remember is that your credit score is the most important thing. Your credit score will help determine the rates you get when it comes to the financing you need!
How to choose the right truck factoring company for you
When you are choosing a factoring company, you are going to want to find a business that is right for you, right for your business and right for your needs when it comes to financing and transportation.
Each truck factoring company will offer its own services, rates, requirements and programs. With that being said, choosing the right truck factoring company for you goes beyond just looking at the raw numbers and information.
Here are some of the top considerations that you should be making.
Flexibility
One of the primary things to look out for is flexibility. While truck factoring companies may encourage you to sign a contract with a set time-length (typically a year), they should also be willing and able to work with you if you are not interested in signing a contract for that long of an amount of time.
If there are companies that demand you sign a specific contract with a length of time connected to it that you are not comfortable with, then you should look for options that are willing and able to be flexible.
Find a truck factoring company that is able to offer month-to-month agreements so that you have the flexibility to use truck factoring when you need it, and not use it when you don’t.
Another important kind of flexibility to keep in mind is the freedom that a great truck factoring company should offer you. You should not be forced to meet a specific kind of invoice volume from a truck factoring company. It’s important to have flexibility and freedom to choose which invoices you want to factor.
Ask the company about the terms and make sure you understand what you are signing up for.
Additional services and benefits
The very best truck factoring companies offer top services to their clients such as 24/7 access to your personalized online account, free credit checks for customers, fuel card programs, insurance assistance, and offering professionals to help you collect from your customers. While these additional services are not necessary, they absolutely will help you make the decision when it comes to which company is the best for you.
Quick and easy business
The very point of working with a great factoring company is to make sure that what you need is taken care of quickly and with little effort on your part. You don’t want to waste your time trying to work with a factoring company that is going to force you to jump through countless hoops just to get approved. And you’re not going to want to worry about having to pay a service fee just to apply.
Look for the factoring companies that focus on approving the credit of their potential customers only so that you can be sure that if you’ve got the credit score necessary to be approved so that you can get started quickly.
Recourse and non-recourse factoring
One main priority that you should absolutely keep in mind when you are choosing what factoring company to go with that you know about the differences between recourse and non-recourse factoring.
While non-recourse factoring may seem like the more appealing option because it means that the factoring company itself is responsible for any unpaid invoices, both programs have their specific pros and cons. Keep in mind that while non-recourse factoring is going to make sure that the factoring company is working on your behalf to get invoices paid, you will also have to pay an additional amount for that service.
If you are looking for the most affordable option when it comes to truck financing, go with recourse, if you want to have a company that really has your back every step of the way, go with non-recourse factoring.
- Recourse factoring requires clients to repay the factory the amount of money you received from them for the unpaid invoice if your customer refuses to pay them. In other words, you may find yourself on the wrong end of an unpaid invoice if the factoring company is not able to collect.
- Non-recourse invoice factoring offers meaningful credit protection for clients. This means that the factoring company will accept the risk while making sure that your credit is guaranteed on the factored invoices. If your customer happens to not be able to pay for their invoice owed, the client (you) will not be financially responsible and you will not have to worry about repaying the factoring company.
Both recourse factoring and non-recourse factoring will guarantee to provide you with money, but only recourse factoring could put you at risk of developing bad debt.
How quickly you can gain funding
Another way to make sure you are making the right decision when it comes to truck factoring companies is to get a good idea of how quickly they are able to finance their clients. Make sure that you are thinking about working with a company that is able to guarantee that you will get your cash in and within 24 hours.
The process should work for you and work on your timetable, not the other way around. For that reason, if a potential company is not guaranteeing fast financing, then you should probably think about looking elsewhere.
They make an effort to stay connected
It is beyond important that you ultimately decide to go with a company that is able to make it a priority to stay connected with you every step of the way. This means finding a company that is experienced and organized enough to keep you on top of mind all the time.
The reason why is because you want to be sure that if you run into an issue or have a problem of any kind, you should be able to reach someone immediately.
A great sign to look out for when it comes to a factoring company being able to care for you and your company the way you deserve is to have a company that assigns an account manager to track everything for you and keep you updated every step of the way. Beyond that, find a company that is able to pick up your calls and answer your emails in a realistic timetable that works for you, not for them.
You are paying to receive top service and you should expect the very best from them every step of the way.
Crucial terminology to learn
Before you get started on your journey to finding the right truck factoring company, there is some great terminology that you can learn to make sure that you know exactly what you are getting into:
- Spot factoring: This term means that you, the business owner, have the freedom to choose which invoice you want to factor and your contract will keep that freedom protected.
- Reserve: This indicates the percentage of the total invoice amount.
- Advanced rate: The money you receive immediately by the truck factoring company based on the percentage of the total invoice amount.
- Customer: The customer who is required to pay the factoring company for the freight invoice.
Conclusion
Now that you have the rundown, hopefully you have a better idea when it comes to choosing the right truck factoring company for you. Good luck!
