One of the easiest ways for trucking companies to keep a constant cash flow is through a freight factoring partnership. Freight factoring is a financial service where you sell your bills of lading at a discount to a financial partner. That partner pays you instantly for the loads you haul, takes over the invoicing process, and follows up on payments that aren’t made on time.
You get paid instantly instead of waiting 30, 60, or 90 days for payment. All for a fee that usually ranges from 1% to 5%, depending on the number of trucks in your fleet. It’s so much cheaper than the interest you’d pay on a credit card or business line of credit.
Choosing the best freight factoring partner doesn’t have to be complicated. TBS offers tips to guide you throughout the process and better understand how freight factoring works, what your responsibilities are, and how to get started.
Assess Your Needs
The first step to arranging freight factoring is to determine your needs. Cash flow issues are a driving force behind most trucking companies seeking freight factoring. You might have additional needs like scaling down the hours it takes your office staff to generate and send out invoices and then chase down payment when a client is late.
Once you know what your el flujo efectivo issues and goals are, explore the other things that would make it easier to run your trucking company. Would fuel discounts help? Do you need access to low-cost business loans, cheaper insurance rates, load finding boards, or gas discounts? Have a list of services that are at the top of your must-have list.
Questions to Ask a Freight Factoring Company?
As you come up with a list of possible freight factoring partners, ask these questions.
What are the prices and fees?
Ask to see a full list of fees and any hidden costs. Check with your bank to see if they’ll charge additional fees for an EBT. Make sure that you’re okay with the fee schedule as you compare rates with your top picks for freight factoring companies you’re considering.
Am I required to factor every client’s invoices, or can I pick and choose?
You may have clients you’ve worked with for years who you know pay quickly. You don’t want to factor those invoices, and that’s keeping you from signing up for freight factoring. Many companies allow you to pick and choose which clients are factored. Ask if that’s possible. If it’s not, you should look for one who does allow it.
How do I reach customer support?
Explore how you reach customer support. Is there live chat or text support? How about email? Are you restricted to phone calls only and during specific hours? If you’re going to struggle to get answers to your questions because the office is closed when you’re not on the road, you’re going to have a hard time accessing customer support.
Do you offer additional services? If so, what are they?
See if additional services are available, as they can help you with daily operations and getting paid fast. Some of the most popular options are fuel discounts, discounted insurance rates, freight load finding boards, and fuel finders that help you find the lowest prices for gas and diesel when you’re on the road.
The Keys to Building a Successful Factoring Partnership
After going over those questions, you should have your decision narrowed down. You want to pick a company that is responsive and easy to work with. You also want to make sure you can do your part by submitting bills of lading in a timely manner and not sitting on them for weeks.
When you do have questions or concerns, make sure you clearly communicate it. Don’t sit and let irritation or annoyance build. Remember they may have no idea that something is wrong, so give them a chance to look at the situation and correct an issue or respond with why something happened the way it did.
Finally, make sure you understand the terms and conditions of the contract. Frustrations often arise due to misunderstandings in how long things like a verification process can take. Verifying brokers and clients doesn’t happen in seconds. Sometimes, it can take hours or even days to get the information that’s required to approve or deny a factoring request. Most companies strive to do it in minutes, but complications or slow responses from brokers and shippers are always possible.
What Does TBS Offer?
Those are the best questions to ask and things to consider when finding the best freight factoring partnership. Where does TBS fall in all of this?
When you partner with TBS, we offer several additional services that benefit freight factoring companies. Start with our goal of making sure all customers are completely satisfied. Add to that unlimited free business credit checks. Before you take on a new client, we can run their credit history for you and provide you with the information you need to determine if that new client is too much of a risk for your needs.
We have handy checklists for some of the important requirements you need to get started as a trucking company. Our checklists help you stay organized and pass your first DOT inspection. We have checklists for getting the permits you need to become operational. We also have guides to choosing the best tires for your rigs and avoiding accidents getting into and out of a truck.
Setting up an account is free and takes as little as one business day. We also ensure that once you are set up, you get paid the same day whenever possible. If you deliver a load after office hours, we’ll pay you as quickly as we can the next business day.
You get a TBS: Get Paid app that makes it easy to submit bills of lading paperwork for fast payment. Using VeriFast, the technology uses GPS check-in that you picked up the load and mark when you’ve dropped it off to get the payment process started immediately for same-day payments when possible. You can also use the app to check the status of payment requests, view your accounts receivable balance, and request a fuel advance when needed.
Sign up today and discover how much easier it is when you have a consistent cash flow. TBS Factoring is here to provide the partnership you want to keep your trucking company operating with a strong cash flow all year.