Selling your receivables to a factoring company for cash flow is a great way to start and grow your business. Unfortunately, not all factoring companies are created equally. Here are some tips to help you choose the right factoring company from the beginning.
Factoring Company Experience:
There are quite a few options to choose from in the freight factoring market. When making a decision, be sure the company is established and has the experience to help your company grow. Look for companies that specialize in your specific industry. At Single Point Capital, we specialize in factoring for the transportation industry. Our ability to “talk truck” comes from years of experience and a great team of employees.
Fees and Rate Structures:
Be very careful of fees and rate structures. Rates can range anywhere from 2% to 6% and often times the fees on the lower end of the spectrum have additional fees included. These fees can be added through a tiered rate structure, bank fees, per invoice fees, or a variety of other sneaky charges. Always be wary of the “hidden fee”.
Flat rate can mean different things to different people. When you are being offered a flat rate, be sure to clarify that means you are getting your full advance amount upon purchase. Often times factoring companies will offer a flat rate but really mean they are going to hold a reserve that may not get returned for months, or potentially ever.
Be Patient. Be Thorough:
Find out everything your potential factoring company offers and be diligent in your research. Factoring companies can simply fund invoices or they can offer a complete suite of supportive services. For example, Single Point Capital offers factoring, logistics services, free load boards, a fuel program, insurance quoting, compliance services, and much more.
Finally, don’t forget about customer service. Attentiveness and the willingness to help can go a long way, especially in the trucking industry. A few minutes can be the difference between making money or backhauling home with an empty truck. Single Point Capital prides themselves on answering the phone and having the knowledge to help our clients run as efficiently as possible.
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