Financing Your New Trucking Company with Freight Factoring
Updated: Mar 16, 2020
Starting your company is clearly going to be expensive, and unless you plan on financing your new company independently, you will need help getting consistent funding. For new truck company owners, signing with a factoring company is a vital part of the plan. It allows you to keep your trucks on the road hauling loads and making money, all without missing a payment. Shippers and brokers will typically pay the carrier within 45-60 days (enough time for you to miss a payment). Factoring company's give you the money up front, usually within 1-5 days (Porter Billing Services provides same day funding, just saying), then they wait for the shipper or broker to pay them for the load. The biggest advantage of factoring for your new trucking company is how consistent the money flow is. It makes it easier to pay for your expenses with less chance of missing a payment. It also takes some additional stress off of you, and lets you focus more on running your company.
To help make this process a little easier, here are the top 5 tips to consider when choosing a company to factor with!
1. Customer Service - Will you be working with the same client represent each time?
It can be a pain speaking with a different person each time you call up your factoring company. Make sure that the factoring company you choose to factor with has dedicated client representatives that deal with you and your company, so that you get the best service possible. It's also extremely important that you have 24-hour, online access to your account so that you are able to keep track of where you funds are in the factoring process.
2. Flexibility - Can you choose when and what invoices to factor?
It's always the best to choose a factoring company that has flexibility. Some factoring companies require you to factor a minimum number of invoices within its contract terms. Choosing a company with a great deal of flexibility allows you to be in control of which invoices you want to factor, and which ones your choose not too.
3. Fuel Cards - Are Fuel Card options available?
Without fuel, you can't drive. If you can't drive, then you can't haul loads. And if you can't haul loads, you don't have a trucking company. When choosing your factoring company, make sure they offer a Fuel Card - preferably a free one.
4. Recourse vs. Non-Recourse - Are there different agreements available to you?
Knowing the difference between Non-Recourse and Recourse factoring is beneficial when picking a factoring company to work with. Especially with new truck company owners, a non-recourse agreement is more common as the factoring company incurs all the risk if a shipper or broker doesn't pay the invoice, leaving you less to worry about.
5. Contract Options - Does the factoring company offer different contract options?
When you sign with a factoring company there will always be a contract in place. When choosing who you want to work with, make sure to always read the fine print and know exactly what you are getting into. The best factoring companies offer a variety of different contract options like month-to-month or annual contracts.
Following these tips when finding the best factoring company to work with will make the process a lot easier and beneficial for you. You know what will make things even easier? Apply with Porter Billing Services as we check all the boxes for each one of these tips! Take a look at some of the great reasons why you should factor with Porter.
The only thing that's left for you to do now is know where you are going to find your freight. Stay tuned for our next blog of the series to help you find loads for your new trucking company!!!