Many freight factoring companies that provide brilliant services and programs to the trucking companies to improve their cash-flow and business expansion. But only a few are the experts that excel at their work. The selection of a freight factoring company can be critical. You need to seek a factoring company with the best rates and experience.
There are various options to choose from. You cannot partner with the first factoring company you find, you need to have all the information and research your options to select freight factor that best suits your business.
You need to ask and consider these following questions while selecting the right freight factoring company:
HOW LONG HAVE THEY BEEN IN BUSINESS?
You should work with a factoring company that has been around for a while and have experience. The transportation factoring industry can be very fluid and competitive. The ideal time should be at least 5 years in the business. Look for factoring companies that have established records of success.
WHAT’S THE COMPANY’S REPUTATION LIKE?
You should make sure that the freight factoring company you are selecting has a robust online presence. You should search online and check what the customers are saying about the company and its services. You should consider checking positive reviews to see how well is the company doing. You should probably not work with a factoring company that has negative reviews.
ARE THEY TRANSPORTATION SPECIALISTS AND PROFESSIONALS?
Many factoring companies for trucking claim that they are specialists in the transportation industry, but not every company is a specialist and professional. It could be a serious liability if you work with an inexperienced factoring company. You could ask them industry-related questions to find out if they are actual specialists. They are should have all the information about the industry terminology.
DO THEY OFFER FUEL CARDS?
Most freight factoring companies have a fuel card program. Many companies provide you with important fuel discount coupons. If a factoring company is not providing you with a fuel card program, you should automatically disqualify that company. You should also consider factoring companies that provide fuel advances. This is a special kind of advance. It is used to cover fuel expenses and provides funding when you pick up a load. Small carriers that run low in funds could benefit from this advance. This is one other important point to check what is the best freight factoring company?
HOW FAST CAN THEY FUND YOUR BUSINESS?
It can take as long as a week before a freight factoring company decides to work with you if you have a large trucking business and operation. If your business is small, it can take a day or two. Once your company has been approved for funding, the best factoring companies should be able to send you money within 24 hours.
WHAT IS THE FEES AND RATE STRUCTURE THAT A FREIGHT FACTORING COMPANY CHARGES?
You should be certain about how much it will cost you to factor your invoices before signing any agreement. Some companies tend to have several hidden fees.
HOW LARGE AN ADVANCE DOES THE COMPANY OFFER?
You would probably want to work with factoring companies that provide you the largest percentage of your invoice beforehand if you have cash-flow problems. It must be something closer to 90% and not just 60%.
DOES THE COMPANY PROVIDE FLEXIBLE TERMS?
You would not want to be working with a freight factoring company only to find out later that you can’t work with specific clients, or that you are stuck in a long term agreement or you need factor every invoice you create. Lenders understand that in today’s powerful business landscape, it is important to have flexibility. That’s why many lenders are willing to be understanding and quite accommodating. Many leading lenders require no volume or frequency requirements. They let you factor your invoices at your leisure and comfort.
DO THEY REQUIRE COPIES OR ORIGINAL INVOICES?
Many freight factoring companies need freight brokers and trucking companies to give original invoices to get an advance. That becomes a hassle and is not always a good option. Leading factoring companies usually can fund businesses and companies with copies of invoices. They don’t require the original invoices.
DO THEY FUND FREIGHT BROKERS?
If you are a freight broker and require factoring, you should ask your factoring companies this question. Most freight factoring companies only finance carriers and do not finance freight brokers. You keep in mind that freight factoring companies that fund freight brokers often have an advance of 90% and they tend to pay the freight broker’s carriers directly to make sure that the carriers do not place a charge on the freight bill.
DO THEY PROVIDE UNLIMITED CREDIT REPORTS?
Freight factoring companies can provide you with credit information on all your commercial clients and brokers. Some factoring companies provide this information through an online portal and some provide it over the phone. It’s a matter of personal choice, both the methods work well.
DO THEY WORK WITH WELL-KNOWN LOGISTICS COMPANIES?
You should ask factoring companies if they have clients who work with well-known 3PL businesses, to determine if the factoring company has experience working with the transportation industry. You can ask the factoring company about payments procedures and document submission.
One last important point in choosing the best freight factoring company is that you need to be thorough. Most trucking companies and brokers try to get funding because they are having cash-flow problems and need immediate financing. Don’t just choose any freight factoring company in haste, just because you are in an immediate requirement of cash.
Selecting the correct truck factoring company is complicated to the long- term growth and success of your business. To ensure that you have a successful relationship with your freight factoring company, take a few extra days and research your prospective.
It is a major decision to select a freight factoring company. This decision should not be taken lightly, take your sweet time. If you choose a freight factoring company without considerations and research, you might get into much worse cash-flow situations.