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Transportation Invoice Factoring: How to Find the Right Partner

If you’ve been keeping up with transportation news, you’ve probably watched some of the sudden and unexpected trucking company closures. Yellow Corp was one of the biggest to shut down last fall, but there have been many others since. Getting paid quickly and protecting yourself from these sudden closures has never been so important.

You’re tired of clients paying you one, two, or even three months after you transport things for them. Transportation invoice factoring offers the chance to get paid within a couple of days, sometimes as soon as the same day. Finding the right factoring partner takes time and research, but we have tips to help you make the best decision for your business.

How Transportation Businesses Get Paid Quick

Before anything you need to understand the basics of a transportation invoice factoring arrangement. You need to understand your obligations, your factor’s obligations, and your customer’s obligations.

The basics of a factoring arrangement are like this. You do the work, you submit the bill of lading for immediate payment, and your factoring company takes over the invoicing process and chasing down payments.

You find a job hauling whatever it is and accept the client’s terms. You sign a contract and set the dates for the work to be completed.

After the work is done, you have a bill of lading that you will send to your factoring partner. That partner generates the invoice, pays you the advance minus any fees, and you have the money within a few business days. You might get the money that same day.

Your factoring company then waits for your client to pay. If your client doesn’t pay as promised, one of two things happens. You might have to repay the amount you were advanced if you have a recourse agreement. With a non-recourse agreement, you wouldn’t have to repay if your client hasn’t paid because they suddenly shut down or filed bankruptcy. 

Non-recourse arrangements cost more, but they’re insurance against a rapidly changing industry where companies with long histories in the business are closing their doors permanently.

Points to Consider When Choosing a Transportation Invoice Factoring Partner?

What should you weigh when you’re looking for a factoring partner? These criteria should all be on your checklist.

The Company Itself:

  • How long has the company been in business? 
  • Does that factoring company specialize specifically in the transportation industry or are they general invoice factoring specialists? 
  • What industry or field are the company owners in?
  • Where are they located? Is there an office you can visit?
  • What are the hours?

Fees and Payments:

  • Are the fees and any additional expenses clearly laid out or are you noticing there could be hidden fees?
  • Are business credit checks free? Are they unlimited or is there a limit?
  • Are non-recourse agreements available or are you at risk of having to repay the amount advanced if your client doesn’t pay?
  • Can you be paid when you pick up the load or only when you deliver it?
  • How do you submit invoices? Is there a hassle-free app or do you have to get back to the office and scan and email them?
  • Do you have to factor every load you haul or are you allowed to pick and choose? If you have a favorite client who always pays on time, you might not want to hand over that account to a factoring company.
  • Do you get paid to your business debit card and gain fuel discounts, or do you have to wait for it to hit your bank?
  • Are there flexible contracts that you can cancel without hassle or are you locked in for a set amount of months or years?

Additional Services:

  • Do they offer additional perks like fuel discounts, business debit cards, or loan products with low interest rates?
  • Do they offer a load-finding platform or app?
  • Is there an app used to check the status of your submitted bills of lading? Does it work with GPS for instant verification of your driver’s location?
  • Can you get same-day payments?
  • Is customer service easy to reach? Do they offer multilingual support if you require it?

It’s Time to Narrow Down Your Options

Now that you know what to look for, it’s time to compile a list of factoring companies and narrow down your options. Our advice is to build a spreadsheet and compare the following.

What are the factoring rates and fees? What factoring rate is offered by the factor? Consider the fees your bank might charge. Are there any penalties for not meeting any quotas set by the factoring company? If your client doesn’t pay on time, are you subject to fees? If you have a busy month and need to pull extra business credit reports, what do those reports cost or are you entitled to unlimited business credit reports?

Have you carefully read all of the terms and conditions? Is there anything in the fine print that is confusing or hard to understand? Our advice is to have your business attorney look all contract offers over before you commit. Make sure there is nothing that seems unfair or impossible to meet.

How are the reviews?  Every company is going to have some negative reviews, but you can determine if they’re a concern in your situation. If you’re seeing dozens of reviews saying the same thing about high fees or hidden fees, you’d want to take a closer look at them. 

Sometimes, it’s that people didn’t fully read and understand the contract and that’s on them. But, it could be concerning if you’re seeing dozens of reviews about payments taking a lot longer to arrive than promised or customer support never answers the phone.

Even when you have a transportation invoice factoring arrangement in place, don’t ignore your clients. You want to maintain the business relationship that’s gotten you this far. Keep in touch just as often as you have been.

Why Choose Saint John Capital as Your Transportation Invoice Factoring Partner?

What makes Saint John Capital the best choice for transportation invoice factoring? Our rates are among the lowest in the industry. We’ve been in the freight factoring industry for well over two decades and became members of the International Factoring Association in 2009.

We’re one of the rare freight factoring companies to offer 100% factoring advances. While some companies limit you to 90%, we understand how hard you work and ensure you can have all of the money owed minus our low transportation invoice factoring rate. Sign up online and end the frustration of waiting to get paid.

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