There is no shortage of freight factoring companies operating across the US — which begs the question of how trucking company owners can make the right decision when it comes to choosing which to work with. Below you’ll find a helpful guide to making the right decision when partnering with a third-party factor.
1. Be sure to examine the company’s target market
Not all freight factoring companies are created equal. This is especially true when you consider the industries they typically service. If you own a trucking company, it makes sense to pursue a partnership with a factoring company that specializes in the trucking industry. A company like AccutracCapital, for example, specializes in the trucking industry and only works with trucking companies.
2. How generous is the advance and how quickly do they offer it?
If you’re tired of waiting 30, 60, or even 90 days for your customers to pay on their invoices, you’re likely looking at factoring as a way to help improve your cash flow. Obviously, it doesn’t help if your freight factoring company also takes an inordinate amount of time to pay you the advance. You should look for a factor that confirms applications within 2 to 3 days, and factors invoices the same day or within 24 hours.
3. How transparent are their plans and terms?
To ensure a long-term partnership, you’ll want to choose a freight factoring company that offers a simple, straightforward set of plans without any difficult conditions. Consider some of the plans on offer from the aforementioned AccutracCapital. They offer three popular funding options. The first is flat fee factoring, where the factor takes over the invoice for up to 90 days, starting at 1.59%. They will provide the carrier with a 97% cash advance, while the remaining 3% will be held in reserve and remitted to the carrier when the invoice is collected. For larger fleets, a factoring line of credit is available starting at 0.022% per day. Finally, for carriers with faster-paying clients, there is flex factoring, which starts at 0.49% for up to 10 days. If you’re looking for more information about freight factoring plans, check out their blog and peruse their entire list of plans.
4. What other perks come along with the plans?
It also pays to remember that a number of freight factoring companies offer additional benefits apart from cash advances. Some of these benefits include fuel cards that provide you with discounts, as well as free credit check services to help you review potential customers — allowing you to mitigate risk when you take on new business.
Many of the better perks you can receive from a freight factoring partner is quality customer service. Your factor is essentially working as your accounts receivable department, and so it pays to pick a company that understands the trucking industry inside and out and pays close attention to the needs of your customers.
Hopefully, these suggestions help you begin the process of choosing the right freight factoring partner for your needs. Remember that when you look for a freight factoring company, there’s more to the process than simply securing cash advances. Remember to look carefully at plans, secondary benefits, and how well they will be treating your customer base. You’ll be glad you did.