We’ve answered these questions before: “what is freight factoring,” “how can it help my business grow?” and “how can it help my business get through hard times?” We’ve also discussed how to find the best factoring company for your business.
But what about after you’ve found a great factoring company. Before you sign a contract, how can you be absolutely sure you’re locking in a deal you’re not going to regret? No matter what, there are six key questions you’ll want to ask before signing a contract with a factoring company.
How long have you been in business?
This is something that’s pretty easy to figure out on your own, but if you’re not sure, it’s a good idea to ask. How long a factoring company has been in business is a good indicator of the experience and professionalism you’ll receive. Additionally, the longer a factoring company has been in business, the more you’ll be able to research their reputation with clients.
What is your business’s first priority?
Asking this question will give you a good gauge of where the company’s priorities lie. You should hope to hear an answer along the lines of “customer service” or “making your life easier” or “helping your business grow.”
Do you offer recourse or non-recourse factoring?
Now let’s get into the nitty-gritty. Be sure to ask whether the company offers recourse or non-recourse factoring (or both). Non-recourse coverage is when the factoring company assumes the risk of an invoice not being paid. Recourse coverage is the opposite. If a broker does not pay the invoice, the trucking operator has to repay the factoring company. Which kind of factoring you go with will depend on how much risk you are willing or able to take on.
How will we be charged for your services?
Perhaps the most important question of all, asking how you will be charged, is vital to know exactly what you are getting into. Most factoring companies take a cut of your advance, but how much and when you will be charged can vary. Read your contract thoroughly and ask questions to make sure you understand fully.
How long is the contract?
It’s also crucial to understand how long you will be under contract. If you end up unsatisfied with the company, you don’t want to be locked into a year-long contract. Most factoring companies offer month-to-month, six-month, and year-long contracts. If your trying factoring for the first time, it’s probably best to go month-to-month at first.
How can you help my business grow?
Finally, ask the representative of the factoring company if and how they will be able to help your business grow. Their answer will speak volumes about the services you will receive if you choose to sign the contract.
Let us help you find the best factoring company for your freight business!
If you want to give your trucking company a boost, get started with freight factoring today! Head over to our ratings so you can see the best freight factoring companies for trucking businesses you should consider signing a contract with. If you have further questions about freight factoring rates or the best freight factoring company for you, contact us today, and we’ll assist you!