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Trucking factoring or freight factoring is the process of selling invoices at a small discount to third parties. With factoring, you can improve your company’s cash flow. When you have cash for expenses, your business will run more smoothly. Freight factoring is a solution to cash flow problems & another form of financing to get money advanced for the loads you have completed.
Simplex Group is not a factoring agent. However, we are able to offer factoring through a third party. We have teamed up with OTR Solutions which is one of America’s most trusted truck factoring companies. Our Factoring Program Provides:
Simplex Group has been offering full-on trucking solutions for over 20 years by educating its carriers to become independent, knowledgeable, and successful.
We have created a unique factoring program with OTR Solutions, one of the largest and most reliable factoring companies in the nation, and one that we are proud to be partnered with.
Our program is customized to your needs and offers a flat rate, with no minimum requirements and no reserves. This allows you to plan ahead with no surprises or unexpected fees.
Through their user-friendly portal, you will have access to check your broker’s credit at any given time, even from your phone.
In addition to the service that OTR provides, Simplex will assign a factoring specialist to your account who will be available to clear any concerns, ensure efficiency and promote clear communication.
Dedication, transparency, and accessibility are traits that set us apart from other factoring programs.
For a small fee, you will obtain immediate cash for your freight bills as soon as the load has been delivered and the paperwork has been approved. This will provide you with the necessary cash flow to keep operating while you leave the collection of the payment to the factoring company!
OTR & Simplex factoring program will not charge trucking companies for sending invoices to your clients the way many freight factoring companies will. You will not be charged a monthly minimum when you use OTR Capital Services.
Our partnership with OTR Solutions charges a much lower fee for direct deposit transactions and same-day payments than other factoring companies. You will not have any miscellaneous fees when you use this unique program.
Simplex Group is committed to finding the best deals for the trucking companies with which we work. We want factoring to be a stress-free experience for you. We ensure everything is advantageous to our clients before selecting a factoring company with which to partner.
OTR offers free credit checks to the companies that we work with, so you will never have to work with brokers with poor credit ratings.
If your company is struggling financially, you may have thought of taking out a bank loan, but there is an alternative solution for such growth needs, which is factoring. In the majority of cases, factoring may be a better and easier solution to obtain than traditional bank financing to fund the growth of a business. Factoring is not considered a loan, as the parties neither issue nor acquire debt as part of the transaction. Truck factoring can increase your cash flow without increasing your debt!
When you are in the trucking business, you will have a contract with each of your clients that specifies how much they will pay you and when, which is called Rate Confirmation. These contracts will state that the bill is due anywhere from 30 to 90 days, and when you are a new trucking company, this can be a long time.
With a freight factoring company, you won’t have to wait until the bill is due to get your money, you will get your funds advanced right away. You will be able to keep your business running while the factoring companies wait for your client’s payment. Very few brokers and clients pay their bills the second they come in. Chances are, the clients you do business with are struggling just like you. They are likely to take at least 40 days to pay their freight bills, if not more. Some smaller companies may even make delayed payments.
A factoring company will pay less money than the invoice value. The trade-off is that you get the money right away. They make their money from the difference between what they paid you and the amount of the actual invoice. OTR Solutions will process the transaction right away, and you can get your money on the same day.
Most factoring companies will charge you $25 to $30 extra to get your money on the same day. When you are a customer of Simplex Group, you will only pay the factoring company $15 for same-day payments. Factoring requires much less paperwork than a formal loan, so it is easy for the freight company, brokers, and shippers.
A freight factoring company can provide several different services. It will check the credit of any company that you do business with. You will not waste your time dealing with companies who may not be able to pay their bill.
Sometimes it can be hard to collect payment. If collection efforts are necessary, the factoring company will take care of those efforts or hire a collection agency to do it for them.
If you want to use a factoring company, you must fill out an application. The process is usually fairly quick and painless. The factoring company will check your company’s credit and ask you questions about your business. Like any other company, they want to make sure that the companies they do business with are stable.
Factoring companies are more interested in your company being stable and competent than they are in your credit. You will not be the one paying the bills; your customers are the ones who must pay them. They want to make sure you are a credible company and that your customers will not dispute their bills.
They will ask you about your monthly volume, how many clients you have, and approximately how much you invoice per month. Some factoring companies will have a monthly minimum amount. They will require a trucking company to sell them a certain dollar amount worth of invoices every month.
Simplex Group has been in the trucking industry for many years, and we know that a new trucking company just starting wants to save money. We understand that you will only sell the invoices that you must sell to stay afloat. Hence, you will have no monthly minimums when you trust OTR Solutions to be
The more reliable customers you have, the more likely you are to get approved for factoring. If you only work with one or two clients and those clients have financial struggles, go bankrupt, or simply refuse to pay you, an invoice factoring company may decide that you are too risky to work with.
Before accepting you as a client, OTR Solutions and any other factoring company will want to look at your standard invoice. If you normally require your clients to pay within 30 days, you are more likely to get a factoring company to work with you. If you give your customers 90 days to pay, a factoring company may think that it is too risky because so much can go wrong in 3 months’ time.
When a factoring company approves you, you will sign a contract that will specify what percentage of a bill they will advance you and other important terms agreed by both parties. It will also stipulate the type of program and if you will be paid for your entire invoice, in a single-installment transaction also known as “full advance” (popular among new and small carriers and offered with a flat-rate fee), or if you will get paid in two installment transactions.
This last plan is more common among midsize and larger carriers. It splits your fund advances into two payments; the first advance is deposited in your bank within one business day of submitting the invoice to the factor or same-day payment if chosen. The remaining funds are kept in a reserve account, and these funds, less the factor’s fee, are deposited in your account once the shipper pays the invoice in full.
Transparency is very important to Simplex Group. When we partnered with OTR Solutions, we made sure that everything in their transportation factoring agreement would be thoroughly explained to our clients. You will never have to worry about dealing with reserves or unexpected fees unless of course, it was something you agreed to when you signed the contract.
Some factoring companies charge an invoice fee and other additional fees like late payments and collections that are unexpected. You will not have hidden fees when you use Simplex Group and OTR Solutions. We are one of the most ethical companies in the transportation industry, so you get what you are promised!
Factoring is a temporary solution to a trucking company’s cash flow problems, and your contract should have a termination clause. When you work with Simplex Group, we will make sure that it is as easy to end or pause your relationship with OTR Solutions as it was to start it. We offer both short and long-term contracts.
Before you sign a contract with a factoring company, you should make sure that you are signing up for non-recourse factoring. Simplex Group and OTR Solutions offer non-recourse factoring. Simply put, a recourse factoring company will collect an invoice from you if the client refuses to pay or cannot pay an invoice. They will also try to collect from you if your client goes bankrupt.
Non-recourse factoring will absolve a trucking company of blame if a client goes bankrupt or cannot pay their bill between when the factoring company bought the invoice and when it is due. You may not be able to get as much money for your invoice if you go the non-recourse route. However, it is the better option in the long run.
Many trucking companies are financially stable and have been around for a while but still use a factoring company. This is because of all the benefits a factoring company can provide. When you hire a factoring business, they will take care of all the back-office work and send out invoices for you. You will not have to worry about handling collections or managing invoice payments because the factoring company will do it for you. This can save you hours of time and can save you money on personnel.
Simplex Group knows the trucking industry very well because we have been in business for over 20 years. We can arrange meetings between owner-operators and OTR Solutions. We can answer general questions about factoring services as well.
In addition to factoring, we can help you with every element of setting up a new trucking business. We will help you be compliant with the Federal Motor Carrier Safety Administration. We will ensure your driver’s records are filed according to regulations and ensure daily inspections are done to standard and recorded properly. We will also help you acquire personnel and get all the insurance you need to be legal. We can help you plan your trucking lanes, and we can even assist you with your taxes. Give us a call today.