Misconceptions About Factoring
The account receivable department in companies across the nation know the frustration that comes with invoices that remain unpaid for weeks or even months. And company owners definitely know the frustration of waiting for funds so that they can continue growing their business. Other than hounding account payable departments who need to pay invoices or sending them to collections, there is another way to get the funds you need — factoring. At Financial Carrier Services, we offer freight factoring so that you can receive the funds from unpaid invoices and our truck drivers can get the paychecks they need. Instead of waiting for up to three months or even longer, with our factoring services, you can get the funds you’re owned. The process seems pretty simple, right? Well, there are some misconceptions about factoring companies that we’re here to straighten out.
It’s Only For Start-Up Companies
It makes sense that start-ups would need some help in the finance department. Having numerous expenses, and only so much money coming in, if there’s an invoice waiting to be paid, it could be incredibly beneficial to have those funds sooner rather than later. Start-ups often switch to a line of credit when they have a more steady stream of income. And some switch back to factoring even when they are a successful, larger company. There are various methods of getting money, whether it’s credit or a bank loan, but these often take time and require a more thorough credit check than factoring. So, trucking companies of all sizes can benefit from freight factoring.
Factoring Companies Are All the Same
If you’re looking for a bank loan, you wouldn’t assume that each bank offers the same interest rate, right? Well, why assume all factoring companies are the same? There are factoring services across the nation, and each of them have their own fees, technology, contracts, and customer service teams. When looking into freight factoring or factoring for any type of business, be sure to ask them questions about what they offer, their schedule, and it will best to communicate with them. At Financial Carrier Services, we don’t require a contract and have a team of customer service reps who want to build long-term relationships with your company.
Factoring is Expensive
Yes, factoring does cost a percentage of the invoice value. However, a majority of factoring companies offer rates that are in line with, or are even better than, traditional bank loan percentage rates. This does depend on your company’s monthly invoice volume, but at Financial Carrier Services, we try our best to give you a rate that will help you business succeed.
It’s All or Nothing
One of the more common misconceptions about factoring services is that you need to factor all of your invoices. This simply is not true. If your company sends multiple invoices to vendors, you may only want to factor those invoices. Or if you have a vendor who typically pays their invoices late, you may want to factor invoices from them as well. But by no means will a factoring company require you to factor all of your invoices.
It’s Just For Struggling Companies
This goes along with the misunderstanding that factoring is just for start-ups. While many fledgling companies (and struggling companies) need some financial support and choose to utilize factoring to get paid sooner, it doesn’t mean even the most financially stable companies can’t use factoring services. The truth is that factoring allows companies an easier way of getting payments sooner because it’s a reliable way of getting financing. Whether it’s a struggling company, a start-up, or a mid-size to large company, if you want your company to grow at a faster rate, factoring can make that happen.
You’ll be Stuck in a Factoring Agreement
There may always be factoring companies who require up to a two-year contract that include fixed rates, termination fees, and a lack of flexibility. However, trustworthy factoring companies will want to work with a company to meet their financial needs. Keep in mind that as your company grows, rates and fees may be adjusted. In addition, a long-term agreement can be beneficial as well, if the factoring company offers reduced fees and better rates.
Our freight factoring at Financial Carrier Services are meant to give your trucking company flexibility, no contract, and competitive fees. We know how hard it can be to keep a steady flow of income, which is why we started providing factoring services in the first place. Whether you need funds to pay your truckers paychecks or if you need funds from an unpaid invoice, we have the team who can help.
Trucking companies keep things moving around the nation and without a consistent cash flow, things stop moving! Don’t let invoices get in the way of your company growing. Learn more about who we are, the financing services we offer, and get in touch today with any freight factoring questions.