What Makes the Best Freight Factoring Company?
Updated: Mar 16, 2020
If you own a trucking company and your brokers/shippers don't pay you for 30 to 45 days, you may be wondering what makes the best freight factoring company for you to work with? Choosing the best freight factoring company for you is a big decision and should not be rushed. This blog will guide you in deciding what the best freight factoring company is for you and how to start the process of choosing a company to partner with.
Not all freight factoring companies are created equal
The first thing to know is that choosing a factor is like picking a new car. You would never walk into a car lot and only ask "How much are your cars?". But, shopping for a freight factoring company often begins with asking "What factoring company offers the best rate?".
Just like the cars in the lot, not every freight factoring company offers the same thing and they certainly don't price every program the same. Here are some examples of differences in the program that can affect the price you pay:
Is it a non-recourse or recourse program?
Does the factor hold a reserve or do you get 100% up front?
Do you work with a personal client rep or is there a 1-800-wait-awhile number?
Is there an extra fee for same day funding?
Are billing and invoicing included or is there a separate charge?
Do the broker's pay terms effect how much you're charged?
Do you have access to advances?
What is the length of the contract and what does it cost to leave?
Know what's important to your business
Just like factoring companies, every trucking company is unique and has different needs for their business. Be skeptical of freight factoring companies offering a one-size-fits-all program. Knowing your own business and what's important to you will help you ask the right questions. Some key questions to ask yourself are:
Are you willing to take on the credit risk (the risk of not getting paid) for the broker or do you want extra protection in case the broker goes out of business?
Do you want all your money up front or do you want to keep some in reserve?
Is getting funded quickly important to you or are you comfortable with getting paid once per week or every couple of days?
Are you comfortable being locked into a contract for an extended period or do you want the flexibility to switch factors if you're unhappy?
Do you want to bill and invoice each of your loads yourself or do you want that included in your factoring service?
Is it important to know who takes care of your account or are you okay with calling a general customer service line with your questions and concerns?
Are you looking for help in other areas like fuel, finding loads, insurance, or compliance?
The answers to all these questions should affect not only how you pick a factoring company but also how you select which program they offer (if there is more than one offered).
Do your freight factoring homework
Last and most importantly, do your research before you sign up with any factoring company. What you hear from a salesperson or read in a marketing flyer might be very different than what you get with the daily operations. Here are a couple of items you should take time reviewing before signing on the dotted line:
Look at the freight factoring companies online reviews - What are their customers saying about them? What do those customers talk about liking the most with the company and services?
Read the fine print!! - This is so important. Make sure you particularly read the fine print when you are signing an application. Is it a contract or can you you leave and work with someone else if you change your mind? Ask for a proposal and/or copy of the contract to review before signing anything.
See if the contract matches the sales pitch - Look for clauses about termination, rates, fees, and charge backs.
A little bit of research can go a long way in deciding which company is the best freight factoring company for you. Knowing who you're going into business with is always a good place to start. Even if you like what you hear, sometimes things aren't always as they seem on the surface. So it pays to know what it costs to get out before you get in!
If you'd like to learn more or have any questions about the services we offer, please call our factoring specialists for a free consultation - 205.397.0934