Whether you are a new start up trucking company or you have been in business for 50 years, most logistics companies use Freight Bill Factoring to help with the cash flow needs to cover their day-to-day expenses such as fuel, toll, insurance, maintenance, payroll and the like. If you are considering this for your trucking company you have likely spoken with others about the benefits and drawbacks to using this type of service.
While speaking with others about the idea is good I would like to add some objective points for you to also consider before signing up with a company for your Freight Bill Factoring Service.
1. Be sure the funder is available to you. The last thing you want is to have a company that you cannot reach when you needed to speak with them. It is your money and your income that is being leveraged or in other words, the “life blood of your company” is at stake – be certain they are available to you when you need them.
2. Will the funder be funding you on a schedule that is acceptable to you? Some funders will fund you same or next day on the invoice that has been submitted for Freight Bill Factoring. Some will wait a week to do it or require a minimum value to process them in batches. Again, this is the “life blood of your company”, will they be doing you a service, or disservice?
3. Does the funder have a drop-box on your routes that you can submit your invoices or can you email or fax them in? Some companies require original invoices and if they do not have drop-boxes on your routes, it can delay the submission of your invoices until you can get somewhere to send them in. If they do not need originals then you can fax or email them in on the road which may be a better solution for you.
4. Does the funder have a good grasp on the trucking business? There are many finance companies that can advance on invoices but if they do not have a dedicated team specifically for trucking, how likely are they to understand the nuances of your business?
5. Does the funder have the capacity to fund your logistics company without interruptions? You need to be sure the company you deal with has the financial capacity so that when your invoices are sent into them, they will be able to do the needful and fund you as they say they will. The last thing you will want is for them to have to wait to receive payments from other invoices in order to send out your advances on your invoices
6. Can the factoring company service all or at least most of your customers? Some funders will not fund international invoices and if you ship internationally, this can be a real problem. They may want to carve out those international customers you have and not advance on them. Can you afford this or not? This is a question you need answer.
Freight Bill Factoring can certainly help your business and at the same time, partnering with a finance company that cannot meet your needs and expectations can severely hurt you. Ask questions and verify the answers before you sign up and do not be afraid to ask around.