Freight factoring services are highly common among trucking companies and fleet owners; however, there are a wide range of factoring myths surrounding this popular service. Freight factoring can bring your company many benefits, especially when you find the right factor.
We hate to see these myths ruin what owners think of freight factoring or keep them from utilizing this service, which is why we’re going to debunk these factoring myths once and for all. Below you’ll find the four most common myths we see in the freight factoring industry and why they’re nothing more than myths.
Avoid Contracts At All Costs
When searching for a freight factoring company that fits well with your business, it might be tempting to pursue the factor offering a no-contract agreement. Although these might seem like a quicker and less frustrating process, that’s far from the truth.
Anytime money is involved, especially in the business environment, a contract is absolutely necessary. The last thing you want is to have the factor fail to deliver what they claimed to offer, and you be out of the money plus potentially owe a service fee. Reading a contract and understanding it before you sign can save you from that happening.
Freight Factoring Services Aren’t Affordable
Most owners will look at freight factoring services as unaffordable or unrealistic because they’ll be giving up a percentage of every invoice they hand off to the factor. While you will be giving up a percentage, it will rarely compare to the amount of money you’ll spend in payroll and customer service without the help of a factor.
If you’re looking at freight factoring services as just another expense on every load you haul, you’re looking at it all wrong. In fact, most trucking companies will cut expenses when factoring invoices.
Freight Factoring Is for the Desperate
One of the biggest myths about freight factoring is that trucking companies should only turn to it if they’re in a desperate position. This is completely false as utilizing a factoring service can even be one of the most beneficial services for the success of your company.
Let’s change the narrative here — freight factoring isn’t for the desperate, it’s for the smart. In fact, it could very well be the reason you avoid desperate situations in the trucking industry.
Freight Factoring Isn’t Scalable
A trucking company that doesn’t have the desire or vision to one day expand, likely never will. With that being said, many fleet owners will avoid freight factoring because they feel their factor won’t be able to scale with them.
The truth is, you’ll actually be able to earn higher financing the larger your accounts receivables grow. This means you can solely focus on running your business, finding new clients, and growing into the trucking company you’ve always imagined.
Your factor will be behind the scenes working their magic, ensuring you get your money when you need it.
With so many freight factoring companies out there, it can be difficult to weed out the quality ones from the lousy ones. That’s why we put together a team of experts to review and rate the best freight factoring services out there.
If you’re interested in getting started with freight factoring today, we can help match you with the perfect company. Contact us today to see how we can help make your decision easy!
References
Landrum, John. “Don’t Get Fooled By These Myths About Factoring.” OTR Capital, OTR Capital, 4 Mar. 2020, otrcapital.com/factoring-myths/.