Invoice Factoring: Common Mistakes
At Financial Carrier Services, we love it when transportation or logistics companies sign up for our freight factoring services. However, we know that there are a few mistakes that can be made throughout the process. So to ensure that your journey with us is as smooth as possible, and to make sure that you get the most out of our relationship, here are some of the most common mistakes we’ve seen.
Failing to Send an Invoice
This comes down to basic accounting and having a solid accounts payable and receivable department, but it can happen. If you don’t send an invoice to the company you’re expecting payment from, they will, of course, not send you payment. So even with a strong freight factoring company, we can’t do our job unless this step is completed. Be sure to keep a record of all sent, paid, and pending invoices.
Sending the Invoice to the Wrong Person
This can happen for anyone, but typically is more common when you need to send an invoice to a larger organization that has several points of contact and departments. Failing to send the invoice in the first place will result in you not getting paid at all. Sending it to the wrong person isn’t as serious a mistake, but it can delay the process, adding on to the time you’ve already waited for payment. If you have any questions about who to send an invoice to, get in touch with the company themselves.
Sending the Invoice Too Late
Another common mistake that occurs regarding the invoice is waiting to send it. Typically, you will want to send an invoice as soon as the job has been completed. Any delay in this step could cause a late payment, leaving your company without the funds you were expecting. Also, keep in mind the billing department of the company. They may have a different process or time schedule, which can cause further delays.
Not Asking About the Upfront Advance Percentage
The upfront advance percentage is the percentage of an invoice (typically around 85 percent) that is paid to your trucking company prior to the customer paying the invoice. The remaining 15 percent, for example, will be paid when the customer does pay. Keep in mind, though, that his amount doesn’t include the factor’s fees.
Skipping the Fine Print
As with any contract, it’s important to read the fine print, however useless or unimportant it may be. Found within the contract with Financial Carrier Services is information about fees, credit scores, subscription fees, early repayment fees, and other important information. Freight factoring fees are typically between 1 and 5 percent, but will depend on your revenue. Knowing this information before you sign on the dotted line will make our relationship much stronger.
Not Keeping the Factoring and Customer Relationship Straight
There are three relationships in the freight factoring family:
You and the factor
You and your customer
The customer and the factor
This is where strong communication comes into play. Your customers should know that you’re working with a factoring company who they may receive phone calls from. Also, provide your factoring company with any necessary contact information for your customers. At Financial Carrier Services, we value each relationship in the process, so the more we know, the better we can work for you.
From the contract to invoices and the many relationships involved in the process, it’s understandable that mistakes can occur. That’s why the team at Financial Carrier Services is so passionate about providing you with the necessary information and tools you need to succeed. We don’t want to just help you receive cash for unpaid invoice, we want to be there throughout the journey to help you with whatever may arise.
If you’re interested in signing up for our freight factoring services, get in touch with us today.