Top Questions Trucking Companies Should Ask When Looking for a Factoring Company

If your trucking business has started to experience cash flow problems, there is no need to worry. Firstly, you are not alone; this often happens to freight companies. Secondly, there is an easy solution: freight factoring. Factoring quickly releases the funds you have lying dormant in your accounts receivable. All you have to do is find the right factoring company. You will find yourself presented with several options, so how do you choose the right one? When selecting a factoring company for trucking, you should start by asking a few critical questions. The answers you receive will tell you what you need to know to make the right choice. Here are the most important questions you should ask. 

Key Questions to Consider When Choosing a Freight Factoring Company:

When shopping around for factoring companies that can help you open up your company’s cash flow, try to get definitive answers to the following questions:

1. How Long Has Your Freight Factoring Company Been in Business?

One of the most important attributes you should look for in a factoring company is experience. Look for factoring companies that have been around for a long time and have a good reputation among truckers. They have thorough industry knowledge and insights, and can help guide your trucking company through the many challenges that arise from financial uncertainty. What you want to hear when you ask this question is that the company has been operating successfully for several years.

2. Are You an Independent Freight Factoring Company or Bank-Owned?

There is an ongoing debate about whether independent factoring companies are a better choice than bank-owned ones. There are pros and cons either way. Independent factors are less constrained by the regulations of the banking industry. Bank-backed factors have the added stability that comes from working with established banks. A well-established, independent factoring company that has developed a strong reputation in the industry is every bit as much legitimacy can be just as reputable as a bank-owned one. If you do opt for an independent factoring company, just be sure to do a background check and ask other truckers for testimonials.

3. What Are Your Freight Factoring Terms, Fees, and Funding Limits?

As with any other funding agreement, you must ensure you understand what you get and what is expected from you, before you sign up. Ask your factoring company how much they will charge you for their services, whether you will be required to sign a contract, and whether you would be locked into a fixed-term agreement or will be free to leave whenever you see fit. You can then decide whether these terms and conditions are acceptable to you.

4. How Frequently and Quickly Will Our Invoices Be Funded?

Does the factoring company limit the number of invoices you can factor in a certain period? Perhaps you may have to wait for a few days to receive your cash after you have sent your invoices. These are fundamental questions to ask, as your cash flow depends on fast, simple, and unlimited factoring services. Look for a factoring company that will factor as many invoices as you want, whenever you want, and will send the money to you within a day of receiving your invoices.

5. How Does Your Freight Factoring Company Handle Customer Interactions?

Factoring is not just about money; customer service is important, too. Find out how the factoring company works with its customers. Is good, friendly service something they value? If not, you would be better off working with a company that will treat you well and do their best to provide excellent service.

6. Where Does Your Freight Factoring Company Source Its Funds?

Where is the factoring company getting its money from? If the funds are coming from a third party, that can lead to uncertainty and reduced security. Is this a steady source of funds? Will the factoring company still have enough funds tomorrow? The point is just to find out where the company is getting its funds and whether you will be able to depend on it.

Essential Traits of a Reliable Freight Factoring Company:

Aside from the answers to these six questions, you would also do well to look out for these three essential traits in the factoring company you choose:

1. Flexibility

Your factor should be flexible and accommodating. If they want to lock you into long-term contracts, charge you penalties for leaving, or place limits on the amount you can factor in a certain period, it is best to look elsewhere. Find a factoring company willing to go with the flow and work with your business’s schedules and rhythms.

2. Financial Stability

Naturally, a factoring company should be stable and dependable. It should have a direct source of funding that is carefully managed and flows steadily. 

3. Professionalism and Service Quality

Your trucking factor should be professional and reputable. You can gauge its levels of professionalism and service by asking them questions about the industry and taking note of the way they interact with you. 

If you ask Little Mountain any of these questions and come to us looking for these three traits, you are sure to get the answers you need and find everything you are looking for. We are a long-standing, reputable factoring company based in Florida, offering our services to truckers nationwide. Contact us today if you are currently selecting a factoring company for your freight business.