Finding the Best Invoice Factoring Company: A Five-Point GuideMay 10, 2019 / Posted in Uncategorized
Freight factoring can be a smart way for trucking companies or owner-operators to get the funding they need to thrive and grow. There are several companies that offer this type of financing. Still, you understandably want to choose one that provides a good level of service. If you are on the hunt for a factoring company, here are five things to consider as you make your decision.
1. Customer Care
No matter what your length of contract ends up being with a particular freight bill factoring company, you’ll still have to deal with people behind the scenes when you make inquiries or discuss your options with new contracts or invoices. So, find out if you’ll be dealing with the same representative, or if the company has a more detached approach to customer care. Level of service with customer care also extends to:
- Ease of being able to reach someone when you have a question or concern
- Knowledge of your account when contacted
- Willingness and ability to resolve issues
Note: If you don’t want to commit to contracts, turn your attention to companies that offer spot factoring options so you can pick and choose which invoices you want to submit.
2. Types of Factoring Offered
Where do you stand when it comes to the recourse vs non-recourse factoring debate? Your answer to this question will help determine which invoicing factoring company is the best one for you. The bulk of the financing industry involves recourse factoring, which means you’ll have to buy back receivables that a factoring company is unable to collect on. With a non-recourse account, the factor assumes the risk of customer non-payment.
If you prefer a non-recourse option, look at the stipulations that apply. jngtETenfvdtetrEFor example, some freight factoring companies offering non-recourse accounts only do so if you have reliable customers likely to pay.
3. Rates and Billing
With rates, you want invoice fees that are fair and in line with your existing available resources. Billing practices are just as important since you don’t want to work with a company that’s going to make it difficult to submit invoices and get your advances. You also don’t want to deal with frustrating delays when waiting to get your share when invoices are paid by your customers. Key issues to pay attention to include:
- Flat rate vs variable rates — see which option each company offers
- What they consider to be an acceptable notice period
- How quickly funds are typically sent for invoices submitted
- How easy it is to submit bills of lading and other load-related documents you’ll need to submit to get paid
You probably know other truck company owners or owner-operators already working with factoring companies. So, draw on these free sources of advice and ask them about their experiences by asking questions such as:
- What kind of service do you normally get?
- Do you like the representatives you deal with on a regular basis?
- Are you getting fair rates?
You can also get some factor referrals from brokers and shippers. This way you won’t be working with a factoring company your customers generally don’t prefer to deal with you on their end.
Lastly, look at factoring company reviews you find online. People are often very honest in posted reviews. You’ll be more likely to get a better sampling of reviews if you go to third-party review sites without a vested interest in the type of feedback that’s posted. It doesn’t hurt to check the Better Business Bureau listing for freight factoring companies you are considering either.