The freight factoring process is extremely important to any trucking company. Not only will it help your business stay afloat day-in and day-out, but it can save you valuable time when dealing with accounts receivables.
Despite all the benefits freight factoring provides, many business owners are unaware of the process and often sign a contract without fully understanding what they’re getting themselves into. This can easily cause frustration and panic to settle in when things don’t go as planned.
If you’re considering freight factoring for your trucking company, you’ll want to understand what UCC filings are and why they’re important to the freight factoring process. Don’t worry, we’ll break it all down for you below!
What Is the Uniform Commercial Code?
The Uniform Commercial Code (UCC) is a set of laws established in 1952. It was designed to create a uniform set of laws when dealing with commercial transactions from one state to the next. Since your trucking company deals with transactions across state lines frequently, you can start to see why this would be important to you.
When dealing with a freight factoring company, there’s a good chance they mention UCC filings. These are simply a financial statement that lists your trucking company’s debt, as well as collateral that the lender or creditor may repossess.
UCC filings are going to be used when one of your clients fails to pay an invoice — or if you fail to pay back an advance that was given to you by the factor. This will typically be in the form of a UCC-1 lien.
Do UCC Filings Affect My Trucking Company?
If your factoring company were to file a UCC-1 lien on your business, it won’t have any negative effect on your trucking company, reputation, or credit score. In fact, UCC filings are designed to protect your business and make it easier to operate from one state to the next.
Keep in mind that states have different laws for different things, especially in terms of how business is done. Trying to work around these laws would be extremely difficult and most fleet owners would end up only providing local deliveries — for the sole reason of avoiding these laws.
Thanks to the Uniform Commercial Code, you don’t have to worry about that. And with UCC filings, you can move forward with confidence knowing that your invoices are being protected.
Different Types of UCCs
There is a wide range of UCC filings that can occur in business, but there will only be two common ones found in the freight factoring process — specific collateral UCC and a blanket UCC.
With specific collateral, the factor won’t hold a stake in all of your assets. Instead, they will hold a stake in one or multiple assets, such as a truck or loading equipment. On the other hand, a blanket UCC filing will give the factor a stake in all of your assets.
Knowing the difference between different UCCs, as well as knowing what UCC filings are, is crucial to the freight factoring process. It will ensure your trucking company is put in the best position moving forward.
If you’re looking for a quality freight factoring company, we can help match you with one in your area. Take a look at our ratings to get started today!
References
“What Is a UCC Filing? Important Info for Trucking Companies.” What Is a UCC Filing? Important Info for Trucking Companies | RTS Financial, www.rtsinc.com/articles/what-ucc-filing-important-info-trucking-companies.
Apex Capital Corp. “What Is a UCC Filing and What Does It Mean for Your Trucking Business?: Apex Capital Blog.” Apex Capital | Freight Factoring for Trucking Companies, 9 Nov. 2018, www.apexcapitalcorp.com/blog/what-is-a-ucc-trucking-business/.