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5 Common Myths About Factoring for Trucking Companies Debunked

5 Common Myths About Factoring for Trucking Companies Debunked

Max 5 min read
Factoring has proven to be an effective financial solution for trucking businesses, so they no longer have to wait 30 to 90 days for payments to arrive. Despite being a popular service, there are some misconceptions surrounding factoring that make some businesses shy away from this growth-boosting solution.
If you are a trucker or owner-operator, this post is definitely for you. Here, we debunked some common myths and misconceptions to help you assess if factoring is the right solution for your business.

Myth 1: Factoring is Only for Struggling Companies

One myth about factoring is that it’s only for financially unstable organizations. As a general rule, factoring is an adaptable funding choice used by a wide variety of trucking organizations, single-truck businesses, or growing fleets.
Factoring empowers trucking organizations to boost their income, cover working costs, and take advantage of growth opportunities without opening another loan. At the same time, trucking companies no longer have to shoulder the burden of chasing payments from clients as the factor takes over.

Myth 2: When a Factoring Company Tells You There Is "No Contract" 

When money is involved, a contract is typically necessary. Factoring companies provide substantial funding to businesses with varying terms and conditions. Therefore, they require a contract to formalize the agreement.
If a factoring company claims to offer a “no contract” program, it should raise a red flag. Such claims need further investigation before engaging with them. While the contract length might vary, there’s always a contractual agreement and a termination process involved.
Additionally, you won’t be able to use multiple factoring companies simultaneously, depending on the company’s rules. Also, the contract will outline important details such as the factoring rate, purchase terms, the factor’s liability, and their control over your funds.

Myth 3: "Brokers don't like carriers who factor" 

It is more accurate to say that brokers don’t like certain factoring companies.
Brokers need a complete, legible, and timely invoice to get paid by their customers. If a factoring company is slow at billing or always bills incomplete or illegible paperwork, that broker will most likely not want to call you for the next load they need to be covered.
The truth is that factoring companies have the responsibility of working with brokers every day and building quality relationships with them on behalf of their company. While every factoring company has this responsibility, there are different standards that they hold themselves to.

Myth 4: "You Can't Afford Factoring"

It’s a misconception to think that you can’t afford factoring. In reality, factoring your trucking invoices often costs less than chasing payments or risking not being paid for the loads you deliver.
By paying a small percentage, you gain access to a dedicated team that handles your invoices, sends bills to your broker, and ensures you get paid faster than usual. Working with a factoring company means you receive your money promptly, and you don’t have to worry about collection anymore.
For those already utilizing factoring services, it’s understandable that cutting costs is a priority. However, when renegotiating rates with your current provider or exploring other options, it’s essential to consider all associated costs and risks. Opting for a lower rate with the wrong factoring company can lead to poor customer service, delayed pay times, and wasted time and money.
Although factoring with the right company might involve a slightly higher rate, it can significantly reduce the time spent managing paperwork or the burden of administrative work. It’s crucial to avoid hidden fees, monthly minimums, and poor billing and collecting practices that can result in chargebacks.

Myth 5: Factoring For Truckers Is For When You Urgently Need Cash

This myth originates from the misconception that factoring for trucking is solely a last-resort solution for urgent financial needs. In truth, factoring for truckers serves as a long-term strategy to improve cash flow.
Truckers frequently face challenges when waiting weeks to receive payment for a load. With operational expenses accumulating rapidly, delayed payments can hinder carriers from accepting additional freight until they’re paid.
Factoring addresses this challenge by offering immediate payment to the carrier, enabling them to settle their bills promptly and resume operations without delay. Instead of being a temporary fix for tight situations, factoring provides a consistent cash flow solution, empowering truckers to manage their finances effectively over an extended period.

Myth 6: Even with factoring, it takes days to be paid

One common misconception suggests that factoring payments still takes several days to be processed, which defeats the purpose of factoring altogether.
However, a reputable factoring trucking company ensures that payment for a load is processed in just a few hours. This swift turnaround enables you to refuel and hit the road again promptly, maximizing your operational efficiency.

Myth 7: Factoring Components DON'T Have Roots In The Trucking Industry 

A typical confusion factoring companies don’t have established in the trucking business. Actually, many factors like Factoring Express have years of experience providing financial solutions for hundreds of trucking companies in and out of Florida.
As a seasoned factoring company in the trucking industry, we understand the challenges of truckers and owner-operators when it comes to delayed payments. We know how difficult it is to cover fuel costs, salaries, and repairs with long payment cycles. This is why we provide a comprehensive funding option, as well as fuel cards, fuel advances, dispatch services, and more. With us, you’ll have a one-stop funding partner to grow your fleet.
We also offer free credit score checks to ensure that your clients have good financial standing before we fund the invoice. This is to prevent the possibility of recourse while also giving you peace of mind. Once your account is approved, you can send invoices and receive your funds within 24 to 48 hours – all without hefty interests or tedious paperwork.

Looking for a reliable freight factoring company near you?

If you’re searching for a ‘factoring company near me‘, then Factoring Express would be a smart choice. With us, you don’t have to struggle with long payment delays or waste time chasing your clients to settle their balances. Once you sell your pending invoices to us, we fund it in as little as 24 hours, and you’re good to go. Our team will take over the collection process so you can focus on hitting the road and delivering more hauls.
If you’re interested or want to know how Factoring Express can help your trucking business, contact us today to talk to our specialist!
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