Getting over the fears of factoring

Group Of People Looking At Something Outside The Frame

We usually fear what we don’t know, so let’s get to know factoring to stop fearing it and to start benefiting from it!

For a small fee, factoring companies provide business owners with the cash to keep operating, and then waits for the brokers to pay for the invoice, which usually takes between 30 to 90 days. It is very challenging for carriers to wait for such a long period of time when having so many upfront expenses such as, fuel, maintenance, insurance, permits and drivers pay just to name a few, without putting your company at risk. It is impossible to put your operating costs on hold, right?

As you review proposals, don’t just compare rates when making your decision, some low rates have extremely high hidden fees and requirements, so pay attention to the details before signing an agreement. If something is not clear don’t be afraid to ask, you need to make sure you are getting the most value and benefits for the factoring rate you are paying. So, let’s do some homework!

There are two different programs available in the “Invoice Factoring World”, Recourse and Non-Recourse and to better explain the differences I am going to use an example: let’s say that a broker from one of the loads you completed and already sold to your factoring company, declares bankruptcy and now they won’t be able to pay back to the factor. What happens then? Well, that depends on your program.

A RECOURSE PROGRAM will charge back the uncollected amount to the carrier, whom will remain the party responsible for unpaid invoices throughout the course of the contract. In this program, the factoring company will advance you without considering the brokers credit because the risk is on you, hence the low-rate and cheaper at first can end up being expensive mistake.

A NON-RECOURSE PROGRAM will not charge you back the amount of the invoice failed to be collected from the broker because you are not responsible. The factoring company takes the risk off your shoulders allowing you to focus on getting the job done, managing your drivers and making sure your trucks are booked. Broker’s credit is taken in consideration before advancing any money and that is their way to protect their investment and yours.

If competing factor companies are offering you similar rates, take your time and do your research. One thing you can do is check the customer’s reviews in google, which you will relate to their personal experiences and their perspective will help you make the best educated decision.

At Simplex we understand the trucking industry and we have partnered up with OTR Capital, the best factoring company in the nation, to provide YOU a unique, attractive and affordable factoring program: flat rate, broker’s credit checks, invoicing assistance at no additional cost, collection support and a personal account manager to help you through it all! We will not only provide you the financial support that you need but will also share our knowledge and guidance to make your business grow steady and stronger.

Let us provide you with the means to make business decisions without being overly stressed while you reach your financial freedom!