Trucking Factoring Guide
Trucking companies can cut out a lot of stress when they make arrangements with truck factoring companies for keeping cash flow ahead of payments due. They have choices now and don’t HAVE to invoice the shippers and wait for their payment. With FACTORING, cash flow is on schedule and their business credit is assured. The factoring companies also offer credit facilities and that is an additional advantage. However, it’s important that the trucking company knows about certain issues involved and follows certain guidelines in choosing and working with a trucking factoring company. 1. When these companies offer you credit, you must ensure that you meet the credit requirements. There are many customers and shippers who do not pay on time and this could affect your relationship with the trucking company. Carry a list of blacklisted customers according to the factoring company and don’t deal with them unless it’s strictly cash upfront!
2. If you don’t find the customer’s name in the blacklisted entries given by the truck factoring company, don’t automatically conclude that the customer is reliable. Check his or her credit status before accepting the load if you are planning on selling the paper.
3. Always keep the original invoices and bills to submit to the factoring company.
4. These truck factoring companies have come into existence to help stabilize revenue for truck company owners. They offer lower interest rates than banks and are reliable. However do not let them dictate terms to you or get intimated by them if yours is a small company or a fledgling one. If you are not happy or satisfied with the service you get, try another one.
5. Before you decide to make a deal with a trucking factoring company, make a background check on them. Today there are a number of fly by night factoring companies that have cheated some trucking companies. Ask around. Talk to other freight companies that have used the services of the Factoring service you plan to use before making the final decision.
6. Study and compare the rates of different factoring companies. Look for hidden charges and most of all, make sure that the company is sound and has built itself a good reputation.
7. Do not jump in too fast for long term contracts however attractive or discounted they may appear. It’s better to start with short term contracts and only when you are fully satisfied with the service thinks of going long term.