Top 5 Tips to Consider when Choosing a Freight Factoring Company
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- 1. Flexibility – Can you factor only the invoices you choose?
- 2. Industry Knowledge – Does your factoring company understand the trucking business?
- 3. Fuel Cards – Is the top factoring company on your list offering a FREE fuel card?
- 4. Customer Service – Is your factoring representative going to be available when you need them?
- 5. Recourse vs. Non Recourse – Does the factoring company offer a Non-Recourse Agreement?
Fact-checked by: Bruce Sayer
Do you know how factoring your invoices can help your business with cash flow? Simply put, factoring is a process where a company purchases your invoices then pays you a percentage of that invoice quickly. Factoring allows you to use the advanced funds to meet your fuel demands or other overhead business expenses.
What should you look for when choosing a factoring company?
When deciding on who is the best factoring company for owner operators, it’s important to remember — not all factoring companies are alike! Choose a reputable and ethical company that understands your business and accommodates your specific needs.
To help you narrow your search, we’ve pulled together the top 5 tips to consider when choosing a factoring company:
1. Flexibility – Can you factor only the invoices you choose?
Some factoring companies require a minimum number of invoices or a minimum volume each month. Be sure to ask about this upfront because there may be instances where you only want to factor your slow paying customers. It’s best to choose a factoring company that allows flexibility so you can pick and choose the invoices you want to factor.
2. Industry Knowledge – Does your factoring company understand the trucking business?
It’s important to choose a freight factoring company that understands the demands you face in the trucking industry. Does a local or national Trucking Association endorse your factoring company? Your factoring company should know the ins and outs of your business and offer flexible solutions and discount programs tailored to your trucking company.
3. Fuel Cards – Is the top factoring company on your list offering a FREE fuel card?
Fuel is the most significant expense in trucking and your factoring company should provide you with a FREE fuel card. Choose a factoring company that has a fuel card so you can save every time you fill up.
4. Customer Service – Is your factoring representative going to be available when you need them?
It’s imperative to choose a factoring company that provides 24-hour online account access so you can see exactly where your funds are in the factoring process. If a factoring company can’t provide online access to your account, they may be lacking critical tools to support your business. Ask the company upfront how you can access your account, and ask for their hours of operation. Are they open evenings and on Saturdays? You don’t work 9-5, and neither should your factoring company.
5. Recourse vs. Non Recourse – Does the factoring company offer a Non-Recourse Agreement?
There are two major types of accounts receivable factoring- recourse and non-recourse. Factoring with recourse means the client must buy back an invoice from the factoring company if the invoice is not paid within a certain number of days. Alternatively, non-recourse factoring means the factoring company assumes the risk for non-payment of an invoice. Does the factoring company offer non-recourse agreements for certain invoices? You may want that extra protection and peace-of-mind that a non-recourse agreement can offer, so it’s important to choose a factoring service that will work with your individual needs.
We hope you’ve enjoyed these factoring tips and feel more confident about picking a freight factoring company! Check back on our blog page for more tips and tricks to help you grow your business with factoring.
ABOUT eCapital
Since 2006, eCapital has been on a mission to change the way small to medium sized businesses access the funding they need to reach their goals. We know that to survive and thrive, businesses need financial flexibility to quickly respond to challenges and take advantage of opportunities, all in real time. Companies today need innovation guided by experience to unlock the potential of their assets to give better, faster access to the capital they require.
We’ve answered the call and have built a team of over 600 experts in asset evaluation, batch processing, customer support and fintech solutions. Together, we have created a funding model that features rapid approvals and processing, 24/7 access to funds and the freedom to use the money wherever and whenever it’s needed. This is the future of business funding, and it’s available today, at eCapital.
eCapital Corp
eCapital Corp. is committed to supporting small and middle-market companies in the United States, Canada, and the UK by accelerating their access to capital through financial solutions like invoice factoring, factoring lines of credit, asset-based lending and equipment refinancing. Headquartered in Miami, Florida, eCapital is an innovative leader in providing flexible, customized cash flow to businesses. For more information about eCapital, visit eCapital.com.