Here’s Explaining What Is Factoring Company?
Factoring companies specialize in providing financial invoices to aid other business better their overall cash flow. Rather than lending you the finances, they buy your due invoices to procure the money you require promptly.
These factoring companies even assist in eliminating the typical 30 to 60 day waiting period for resolving your unsettled invoices and provide you with the necessary funds straight away.
You Can Also Consider Factoring As –
- Accounts receivable factoring
- Accounts receivable financing
- And even invoice factoring
Now, Let’s Move Over To Our Topic Of Discussion – CHOOSING THE RIGHT FACTORING COMPANY FOR YOUR NEEDS!
Check for How Long Have They Been Around In This Business
When sorting out the best factoring companies for truckers, this is the first aspect to check for. By picking a company who has been around for a long time gives you the courage to trust them for your factoring requirements. Moreover, those who have around for some time will present you with more sophisticated financing packages with low overall risks and at better risks.
And going with them will most certainly enhance your chances of your trucking business success.
Properly Go Through Their Terms and Fee Structure
As not all factoring companies function the same way. They consist of different fee structure and their own specific terms for customers to adhere. That said, if you come across a factoring company with the cheapest fee structure, refrain from choosing them.
Usually, such companies are known to include lots of hidden fee namely –
- Background check fee
- Invoice submission fees
- Application fees
- Field examination fees
- Attorney’s fee
- UCC filing fee
- ACH fee
- Wire fee
- Monthly processing fee
Instead; you should go for companies offering industry-specific % of the invoice face value. They also appear more realistic than those very low fee advertising companies.
For your knowledge; you can do a comparison of the industry–specific % of invoice face value. Typically the factoring advance rates range between 70-90% and 80% for those non-specializing firms.
Check If the Chosen Factoring Company Provides Non-Recourse Funding
Believe it or not, but fewer than 20% of factoring companies make use of credit insurance and included them into their factoring offerings. Such non-recourse companies consist of impressive credit culture and balance sheet and easily succeed to become prominent insurers offering credit insurance with a few strident rules.
Such non-recourse funding proves to be beneficial in decreasing your risks of not receiving the payment. Henceforth, this is another crucial aspect that you have to look for when sorting your options.
See If the Factoring Company Is Flexible To Meet Your Specific Requirements
Next aspect you need to look for is their flexibility. There are some companies who may need long-term contract commitments, include pre-payment penances and specific monthly minimums.
Moreover, you will also find some institutions allowing you to pick the invoices you wish to factor. When sorting your options; you should look to avoid terms which need you to factor all invoices. Also, there are some factors which could take over the accounts receivable function. And when that happens, it means that will be accountable for both dispatching all invoices and even collecting them when the time comes.
So, keep this aspect in mind, too when sorting out your options. You can also take help from someone you trust to go over these considerations and then pick a company which will be right for you.
Lastly, Check the Quality of Their Customer Service
It is always important to associate with a factoring company offering quality customer service. You need to check if the chosen factoring company is known to deliver efficient, prompt and tailored services.
Moreover, you also need to check if the company likes maintaining transparency with its customers and doesn’t mind interacting with its customers in a proper manner for meeting their customized requirements.
This aspect is just as important as all the above factors explained. And to check their customer service quality; you can go through their customer testimonial section. Better yet, you can even seek references of some of their recent customers and get their viewpoints on how good they found the company to be.
That should give you enough closure to determine whether to go with the chosen company or not.
There you have it- tips to sort one from the all the best factoring companies for truckers around. Use them properly. It will help save a lot of your time and effort.