Choosing the best freight factoring company is an important decision. It’s also one that’s hampered by several factors, including the size of your fleet. Some companies favor large trucking companies as they have a larger number of invoices. Fees are advantageous for these companies.
But, a trucking company with a small fleet may be even more reliable as they have something to prove. For that reason, some freight factoring companies seek out these partnerships and aim to help the smaller company grow and thrive.
Whichever end of that scale you’re on, how do you find the right freight factoring company? Here are some tips for both large and small fleets.
Check the Company’s Reputation
Research the freight factoring companies you’re considering. Look at their reputation and what others say. When you’re judging online reviews, you do need to use caution. While it seems dishonest, some people will leave negative reviews, even if they’ve never used the business.
You should also see if a company has turned off reviews. Some do, and while it’s not always a red flag, it can be that they were getting too many negative reviews and didn’t want people to see them.
If a company reacts to negative reviews, see how they react. They should take all negative feedback seriously and disprove any inaccuracies, apologize for things they did wrong, and take the time to verify the review is from an actual customer.
What Are Their Rates and Fees?
Ask to see the rates and fees. If they won’t show you what you’d actually pay, move on. You don’t want to get hit with hidden fees after signing a contract.
Most factoring companies will lower rates for companies with larger fleets and increase them for companies with one or two trucks. The best freight factoring company will still offer competitive fees for smaller companies and not refuse to work with them until they’ve increased the size of their business.
Do You Agree With the Terms?
Look over the terms and conditions and make sure you agree to every term. If you don’t agree to a term, see if there is room for negotiation. Never sign a contract if you don’t understand the terms or agree to them. These are a few of the terms to pay close attention to.
If your client doesn’t pay their invoice, would you have to return the amount the freight factor paid you? That’s a recourse agreement. It will have lower fees, but more risk on your end.
A non-recourse agreement takes all of the risk from you, but you’ll have higher fees. Sometimes, a freight factoring arrangement is a cross of the two. You’d be responsible for repaying a specific percentage and the factor covers the rest.
Are you obligated to factor a specific number of invoices each month? If you don’t make the quota, what happens? Are you getting a 100% advance or does the company offer 90% or 95% advances?
How Long Have They Been in the Trucking Industry?
Is the invoice factoring company all-encompassing or do they only factor invoices for trucking companies? It’s best to find a company that specializes in the industry. They’ll know how to help you grow your business and have advice that can help you stay competitive throughout the year.
Do They Specialize in Large or Small Fleets?
Does the freight factoring company specialize in large or small fleets? If the company only works with large fleets, a small trucking company will not be able to work with them. If you have a large company, you wouldn’t choose a company that specializes in small fleets.
How Do You Reach Customer Service?
What is your preferred method for contacting customer services? Some people don’t want to sit on a phone for ages and would rather have email support. Others want to talk on the phone and dislike email support.
Is the customer support team only available during certain hours? Would you prefer to have 24/7 support?
Do you need customer service in a foreign language? If a company only has English-speaking support professionals, it will be a problem for you. In addition to English-speaking support professionals, Saint John Capital has a multilingual freight specialist team with fluent speakers in Bulgarian, Greek, Polish, Romanian, Russian, Serbian, Spanish, and Ukrainian.
What Additional Services and Features Do They Offer?
Always check for additional services and features. There are several that can help your business thrive.
Load Finding Apps:
In the slow periods, your clients may not have enough work to keep you busy. It’s important to look for more work, and a load-finding app helps you do that. You can search by area, rate, and size of load and pick jobs that match your needs.
Track Loads:
An app that tracks your drivers is also helpful. If you have a client calling to ask the ETA, a track loads app helps you provide accurate information. You can also use it to see if any roadblocks or delays are coming up and reroute drivers if there’s a crash or construction that’s causing delays.
Bookkeeping Tools:
When you factor a bill of lading, do you have to create an invoice, too? Ideally, you want to take a photo of the BOL, upload that, and have the system generate an invoice that you can upload to your bookkeeping software.
Business Visa With Fuel Discounts:
Saving money on your fill-ups is important. Whether you have one truck or dozens of them, even a few pennies saved on each gallon adds up quickly. Use the card to get fuel in your rigs and never have to carry cash again.
Click and Pay API:
Wouldn’t it be nice if your clients could click a button and pay you? There’s no longer any need to keep checking the mail. Payments are made online instantly and reach your bank in little time.
Free Business Credit Checks:
While you may not be thinking of free business credit checks as being that important, it can be a lifesaver if you find a new broker or shipper looking for a transportation company.
You can check their credit history and make sure they have a solid reputation for paying invoices on time. Unpaid bills can be a warning sign.
Low-Interest Business Lines of Credit:
If you need money to get you through the slow season, you don’t want to rely on high-interest rates. Bankrate reports that as of 8/1/23, starting rates for unsecured business lines of credit were around 10%. Business credit card APRs were in the 18.49% to 24.49% range. You save a lot of money with a business line of credit.
Talk to Saint John Capital about a line of credit SJC Visa card, and other beneficial services that you can add to your freight factoring agreement. With the ability to get paid the same day and 100% factoring advances, you don’t have to worry about waiting weeks to get paid.
