Truck factoring is a business that has caught on and is also one that is very beneficial to all truck owners. It is different from a bank regarding the rate of interest and disbursement time. Believe it or not, but most of the freight factoring companies do disburse 90% of the amount within 24 hours to 48 hours only. This is great for the truck owners, who face a crunch for money. And that is usually due to the credit line with their customers or clients. Normally, it is advisable to check with known people or colleagues about any freight factoring company before signing up. This is essential for the safety of your business.
Cross check and confirm all that you need to know about a particular vendor in advance. Not everyone can be trusted, even though there are plenty of genuine factoring companies out there who have excellent customer care back up. This is necessary as they are the ones that collect payments from your customer and your customer is ‘Boss’. You wouldn’t want your relations with your customers or clients to be strained, right? It is the factoring company that gives you business and keeps your trucks on the road. Hence, you need to be rest assured that it remains that way. You cannot have a demanding or rude factoring agent. So do ask around and get as much essential information as you can.
If they do have provision for a short term contract, then go for it. Just in case you are not satisfied, you can always discontinue your contract and look elsewhere. But long term agreements tie you down and keep you in an arrangement that is detrimental to the success of your trucking business. And nobody wants that to happen. Your business is your baby, and you wouldn’t want some joker ruining everything for her, right.
So choose one that is right for your business and also has a positive impact on the growth aspect. And having a great vendor is better than going to the bank as the amount of cash you receive is against your invoices (sale of assets) and hence, it is not a loan. It is your money, just being given to you earlier. These funds, in turn, helps you to pay for fuel, salaries, and other expenses that may crop up. It is a perfect ‘arrangement’ if only the vendor is the right one.
Most contracts last a year, after which they are renewable unless you would like to give sufficient notice and discontinue the same. Most truck factoring companies do not enlist small trucking companies, and hence, it is a little harder to find a company if you have a small business. But don’t lose heart there are quite a few companies that do extend credit. If you have a bad payment record, it is possible that you might get rejected for that. So ensure that you have an excellent financial track.