Top 5 Things to Know About Freight Factoring

If you are moving loads across town or across the continent you know the issues you face on a daily basis with respect to covering your working capital needs. Freight Factoring can help alleviate some of those issues with respect to covering the costs of paying for fuel, insurance, maintenance, licensing and tolls.

Most of you need to pay these expenses if not daily, for sure on a weekly basis and when you are collecting your invoices on a 30, 45 or even 60 day cycle, this can make a cash struggle while you wait to get paid.

Freight Factoring can be a real stress reliever so you can cover these costs and have a little money left over for other things while you wait to get paid from the customer. There are however many companies out there that can factor your invoices but what are the things you should look for when considering submitting your invoices for Freight Factoring?

1. Does the finance company understand your business?

You need to be sure the company you are going to partner with understands the needs of your company, if they will not take the time to understand your business, how can they possibly work with you on a daily basis to ensure there are no interruptions in your working capital?

2. Will you be able to contact the Freight Factoring Company when you need to?

If the need arises, will you have someone available to speak with you about your account or will you have to wait days for a response? Will you have a dedicated person for your account or will you be dealing with a call center? Either option can be fine, but you need to be comfortable with what you will be dealing with.

3. How long will it take to have your invoices processed so that you can get your invoices factored?

Some companies may take up to a week for the processing of your invoices to be able to fund them. Are you willing to wait that long or do you want to have next day funding?

4. Does the commercial finance company you are considering to use have the financial capability to fund your business without interruptions?

It is wise to be sure the funder has the backing to fund you when needs and not create issues for you with respect to having to wait for funding because their funds have been used up.

5. Is the advance rate acceptable for your needs?

Generally speaking, funding levels can range from 60% of the invoice value up to 90% of the invoice value, be sure what you need before you make your decision of which company to use.

You may have noticed that Pricing was not in the top 5 things to know about Freight Factoring. While this is important, Pricing is NOT the most important. While you do not want to overpay for the service, going with a “bargain basement price” may have other costs with respect to service that far outweigh the benefit of a low price. Price is important, but Service is far more important. Be sure the service you need is assured and then look at price and make your decision.

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