Freight factoring is an essential part of any trucking company, but sometimes your factor can fall short of expectations. In the era of COVID-19, your factor may have even had to close up their business. Either way, there might come a time when you feel like switching to a new freight factoring company.
First of all, you’re probably right in thinking it’s time to switch. After all, I don’t think you would have that thought for no reason and sometimes it’s best to just go with your gut.
If this sounds like you, don’t be worried or nervous. While it can be a rather difficult process, a majority of the work will be completed by the old factor and the new factor. Your main goal throughout the process is to ensure that you’re choosing the right freight factoring company to take over the reins.
Why Are You Switching?
Much like any business or service, there are going to be a variety of reasons why expectations won’t be met on a daily basis. Eventually, these underachievements will pile up and you’ll be ready for a new freight factoring company.
Below, we’ll list some of the major reasons causing fleet owners to back out of their freight factoring contract:
- Bad customer service, difficult to communicate with when you need it most
- Not receiving funds on-time or in a timely fashion
- Fees are too high, advances are too low
- Doesn’t offer fuel cards or truck maintenance discounts
- The contract is almost up and you’re simply interested in seeing what other companies are offering (which could mean you might not end up switching, but are curious)
Whatever the reason is, finding the right freight factoring company is essential to your day-to-day operations and this decision shouldn’t be taken lightly.
What’s the Process Like?
To put it simply, the process of switching freight factoring companies requires the new factor to buy-out the old factor’s contract. This means the new factor will have to purchase any open invoices currently in the old factor’s lap.
Once the buyout happens and the new contract is signed, the invoices will transfer over to the new factor and they’ll be responsible for them from there on out.
As for the fleet owner, they might have to deal with early termination fees, the cost of actually switching (small fee), and anything else listed in the old contract. There’s also a chance that you go for a short period of time without financing, so you should always prepare for that.
Finding the Right Freight Factoring Company
If you’re having difficulty finding the right freight factoring company to take over your invoices, we’ve done all that hard work for you. We have reviewed countless freight factoring companies and boiled your decision down to a few of them.
We based our decisions on experience, customer service, fees, rates, money transfer frequency and speed. We know how important these things are to your company and we want you to feel confident about your new factor.
“How to Switch Factoring Companies.” RTS, www.rtsinc.com/articles/how-switch-factoring-companies.
Landrum, John. “What to Consider When Choosing the Best Factoring Company.” OTR Capital, OTR Capital, 11 July 2019, otrcapital.com/best-factoring-company/.