It’s time to come up with a better way to keep money flowing. That’s one of the many difficulties a trucking company owner faces each month. You deliver loads on time, but you need new customers to grow your business. When you do take on a new customer, you have to hope they pay quickly. Not all of them do, as some will let invoices build up until the end of the month. That means you’re going weeks without being paid for the work you did.
Freight factoring changes this. Work with a partner to get paid the same day, maintain a strong, constant flow of money, and never have to worry about chasing payments. It’s a great partnership to establish, but how do you choose the best freight factoring company?
Research the Company’s Expertise and Industry Knowledge
How much expertise and industry knowledge does the freight factoring company have? If someone with banking experience runs the company but has no hands-on experience in trucking, that factoring company lacks the insider knowledge you need to grow your business.
Explore the Company’s Reputation and Customer Service
Go read reviews, but understand how to read reviews. No one is perfect, and sometimes people become upset because they didn’t understand the terms and conditions before signing a contract. Deloitte surveyed 2,000 people and 9 out of 10 of them admitted they didn’t fully read the fine print before agreeing to terms and conditions.
It’s so important to fully read a contract before agreeing to the terms. If you don’t understand something, reach out to customer service for clarification or ask a lawyer for clarification before you sign anything.
As you explore negative reviews, see what caused the frustration. If it’s tied to not reading a contract thoroughly, you can’t fault the company. If a review complains about not having access to account information, a company that has an account management app will always have that information available, so you have to wonder if the trucker is using it. Find out if the company actively addresses negative reviews or ignores them. A company that addresses them is doing everything to ensure customer satisfaction.
Find out how you reach the company for help. Are they only available during the work week and specific hours or 24/7? Do they offer chat support, email support, or phone support? Which works best for you? If you want to hear a live voice on the other end of the phone, a company that leans towards advancements in technology and heavily relies on email or chat may not be the best match for you.
Consider the Fees, Costs, and Financial Considerations
Go over the fees. Freight factoring is convenient and allows you to get paid the same day, but it’s not a free service. Most companies charge upwards of 5% for this service, though that does depend on factors such as how many trucks are in your fleet. If you’ve just done $10,000 in work, a 5% fee would reduce the amount you’re paid by $500. You might also have bank fees for the ACH.
Some freight factoring arrangements are recourse vs. non-recourse. A recourse agreement requires you to repay the money you received if your client doesn’t pay. There are non-recourse arrangements, too, which means if your client goes bankrupt and doesn’t pay, you’re not responsible for repayment.
Make Sure You Understand the Rules, Terms, and Conditions
Pay close attention to the rules. If you have to factor every client you do work for, you need to be aware of that. You need to make sure there are no hidden fees. Never sign a contract without reading things over, knowing exactly what you’re signing, and talking to your lawyer about it before you sign.
Questions to Ask as You Narrow Down Your Options
Provided you invest the necessary time to thoroughly research and investigate your options, freight factoring can be a game changer. Never rush a decision as important as this. These questions are essential for helping you choose the best company for your needs.
Do you operate 24/7 or just during specific hours?
You completed a run at 3 a.m. and want to submit that bill of lading right now. Is that possible? Do you have to wait until business hours to get paid or can you submit requests at any hour? Is the freight factoring company open 24/7? Around-the-clock factoring specialists are best for many trucking company owners.
Do I have to factor all invoices, or can I pick and choose?
Single invoice factoring, aka spot factoring, is going to be important to some companies. You have to decide if you want to work with a company that allows you to pick and choose which invoices are factored, or if you plan to factor every invoice.
If you have a trusted client that always pays invoices within a week of receiving them, you may not care to factor those invoices, as you know they’ll be paid quickly every time. Choose a company that gives you the flexibility to select which clients to factor, without requiring you to factor all of them.
Do you have software or a system in place to make it easy to manage account details?
If you’re not able to access information on the go, it often becomes frustrating, especially if you’re an independent trucker trying to grow your own business. You need to access your account from anywhere. A freight factoring company that offers an app with pending and completed payments, downloadable invoices, and a current accounts receivable balance is a game-changer.
TBS offers a free Android or iOS app that makes it easy to track all of that. Have a clear statement of what you’ve submitted, what the funding fee is, the ACH fee, and the total amount due. Pull up the different jobs you’ve completed and ensure TBS has received them. You’ll have instant information on whether they’re processed, completed, or funded. You can also add a new customer through the app in seconds.
Do you have a fuel card or discount program? What other perks do you include?
As a trucking company owner, you know how expensive fuel is. You want to make sure your freight factoring company has a fuel card or discount program. Savings on every gallon of gas or diesel puts money back in your hands.
Another important perk is a load-finding board. When you have a partial truckload or time without a load, it’s helpful to have access to job boards. Look for work by the destination, size of the load, and rate the broker or shipper is paying.
How long have you been in business?
Ask how long the company has been in business. You want a company with decades of experience. The longer they’ve been around, the more knowledge they’ll have.
TBS Factoring Service has more than 50 years of experience in the trucking industry. We offer around-the-clock factoring services and work hard to ensure you’re paid quickly and get back on the road without having hours of financial paperwork waiting for you when you return.