So what is freight bill factoring? and why is reliability so important?
In simple terms, factoring companies pay you money now for freight bills that your customers may not pay for up to 30 - 60 days. Factoring your accounts receivable helps you maintain a constant flow of cash. In a trucking environment that is by nature hectic, constants are critical! Regular, on time payments from your customers can often be a challenge.
How quickly do your customers pay?
Do you spend time chasing payments?
Have you offered discounts but still spend time collecting?
How many of your customers are 'solid' payers?
If you are looking for stability in your accounts receivables, and a way to make your working capital actually work, factoring is an extremely viable option. There are many factoring companies to choose from, and this alone can be overwhelming. Often the first question that springs to mind as a differentiator is how quickly can I get my cash? This is obviously an important question, but there are other factors that should be taken into account.
An experienced factoring company will take time to explain the initial process of qualification that may take longer than the stated 24 hours or less! Realistically your initial set up and qualification can take up to a few days to complete, and is also dependent upon how quickly you are able to furnish the factor with the information they need. Once you are an established customer, however, funding can happen quickly with competitive rates, which is the outcome you were probably initially looking for!
Returning to the 'constant' element. You want a stable, experienced factor who is reliable, dependable, tenacious and prepared to work for your best interests. You may have called to enquire about factoring because you want your money yesterday, but allow the factor to explain the process to you, your end goal is the consistent, regular payment of your accounts receivable.
Truckers frequently multitask from the road, and a second vital question to ask of your factor is how easy is it to reach a real person? This really goes hand in hand with reliability. I am sure you don't want to leave multiple messages and have to wait for a call back, you just don't have the time. Your factor needs to be readily available to answer questions, and knowledgeable about your business, so that your questions have been anticipated and answered before an issue arises.
Make a smart choice when it comes to factoring. The obvious considerations are not always the most sustainable when it comes to reliability. Receiving your money quickly is a key component, but make sure your factoring company of choice is a well capitalized, stable organization that is knowledgeable about your business, and genuinely cares about your success.