As Transportation Company you know Freight Factoring is highly competitive much like the transportation industry itself. From the first day you filed for your authority your phone has been ringing off the hook. The message is always the same, you need factoring and we are the best because…, my way of factoring is the best way and oh yeah did I mention I am the cheapest because my rates are “as low as”.
Now if this is the first Freight Factor that you talk to you tend to believe them but by the end of the day or week after having the same conversation over and over again you realize that there are hundreds of options out there and it can be difficult to determine the best one for you. Here are some simple steps that you should go through and watch out for before making your decision.
1st: Know what you are signing
Some of the disreputable factoring companies use teaser rates to get you to fill out there application and have hidden language in their application that states that it is a contract or gives them permission to fill a UCC lien against your company which ties up your business’s collateral trying to trap you into working with them.
While most of these Freight Factoring Companies have been driven out of the industry by more reputable ones, there are still a few of them out there so you need to ask if they file UCCs up front and gauge their reaction.
In my experience if the answer is no you are in good hands but if they try to justify why they do then you should run. I have tried to help a lot of companies out of these situations over the years and it is just not worth the headache to even go down that path.
2nd: Know what kind of Freight Factoring you are looking for
Take the time to know if you are looking for a recourse or non-recourse, if you’re going to bill with original BOL’s or will your clients accept copies, does this invoice factor require you to factor all your invoices or select the invoices you want to factor, what collateral position are you looking at do you only want your receivables encumbered by the UCC or do you want to drop your rate by having all assets encumbered?
3rd: Do the leg work
Just because your buddy likes their Freight Factor it does not mean they are the best company for you. There are several variables that could affect the way they would work with you, what if your friend is an auto hauler and you run flatbeds or refers, or one of you has a lot of dedicated loads vs the other has a very diversified amount of customers.
Your business is not the same as every other business out there, just like the freight factoring companies. So take advantage of resources like National Factoring Group; research your options up front and take the time to utilize services like the better business bureau and rip off report. If you see something negative or that you don’t like, take the time to ask them about it, and if it will make you more comfortable ask for references
4th: Do not wait tell the last minute
I have seen this time and time again. The conversation starts with I don’t need factoring or I don’t like factoring, and this works until you do. Factoring Companies know and that is why they can move quickly. When you’re running out of time the term any loading doc in the storm tends to happen and you may make the wrong decision.
By using resources like National Factoring Group and understanding what is best for your business, you can have a successful relationship with your Freight Factoring Company that can be both profitable and allow your business to grow. Through National Factoring Group you can compare the Freight Factoring Companies that fit your businesses needs and select the best factoring company with the confidence that you are making the best factoring decision for your business.
Originally published: 5/23/2014 nationalfactoringgroup.blogspot.com