One of the biggest concerns a trucking company will have when considering freight factoring is how it will affect their customer service. As you can likely imagine, quality customer service is a crucial part of any trucking company and will often be the reason your clients stay with you long-term.
With freight factoring, you’ll be selling open invoices to a third-party company (known as the factor) in exchange for an advance. As a result, the factor will assume responsibility for the invoice and will be required to collect payment from your client.
While this means the factor will be in contact with your clients, it doesn’t mean they’ll harass your clients as a credit agency might. It’ll allow you to receive money in a timely manner, save time with your accounts receivables department, and feel more confident about your business on a daily basis.
If you’re still on the fence with freight factoring for your trucking company, hopefully, we can answer some of your questions and make you more comfortable about the service — especially since it’s quickly becoming a major component to any trucking company.
Are Factors Going to Harass My Clients?
Since this is one of the biggest concerns with freight factoring, we’re going to detail the process a factor goes through with your clients when you decide to sign a contract with them.
First, you’ll need to send the invoices you want to be financed over to the factor. The factor will then notify each client where they need to send payments from now on (since it won’t be you anymore). This will be the first time the factor contacts your client.
The second time they’ll contact your client the factor will verify the invoices to ensure there are no issues with any of them; however, this may be discussed during the first contact. This is for quality control and will be a large part of the process.
After that, there’s a good chance your client never hears from the factor again — unless an issue presents itself. Of course, your clients will still have contact with you and you’ll still have contact with them.
Most Clients Will Understand
When it comes to freight factoring, most trucking companies will fear that signing a contract will make your business look bad. Keep in mind, they will be contacted by the factor to confirm the switch and verify invoices.
While this is true, it doesn’t mean it will make your company look bad. In fact, many of your clients will understand why you’re switching your invoices over to a factor and there’s even a chance your clients use factoring for their invoices.
The good news is a majority of the work will be done by the factor. If you don’t want to notify your clients that you’ll be making the change, you won’t have to. A majority of your accounts receivables will be handled for you.
With that being said, it wouldn’t hurt to notify them and they won’t think any differently of your business.
The last thing you should understand about freight factoring companies is that they have a reputation to uphold — just like you do. They will treat your customers with respect and will do their best to keep them happy because that’s what will keep you happy!
References
“What Is Factoring?” RTS, www.rtsinc.com/guides/what-factoring.
“Complete Guide to Choosing a Factoring Company.” RTS, www.rtsinc.com/articles/complete-guide-choosing-factoring-company.