There are many trucking factoring companies and all of which will provide you with flexible financing options. These factoring companies will all provide you with immediate funds based on your freight bills, eliminating your 30-60+ day wait to be paid. They do however have many differences that can drastically affect your bottom line and overall experience.
- Factoring Fees – The factoring fee is the fee that the factoring company charges to fund your freight bills. The fee typically ranges from 2-5% with some charging higher than 5%.
- Additional Fees – There are many additional fees factoring companies charge their clients. They range from Documentation Fees to Application Fees and ACH/Direct Deposit Fees, Filing Fees, Due Diligence Fees, Administration Fees, Termination Fees and more. Or you can choose a freight factoring partner such as Tetra Capital who does not charge any of those additional fees.
- Fuel Cards – Fuel cards are the perfect tool for trucking companies to save time and money, saving you up to $.12 per gallon each time you fill up! Some freight bill factoring companies will load your funds directly onto the fuel card eliminating the need for you to take the time to do it.
- Flexibility on the loads you factor -The terms of the agreement the factoring company will present to you can vary greatly in regards to the loads they will require you to factor. Some will lock you into factoring all your loads, whereas some will lock you into factoring all the loads with certain brokers/shippers and others, like Tetra Capital will allow you to choose which loads and when you factor.
- Contract duration – Factoring Companies offer a wide variety of contract durations. Some lock you into a contract lasting several years, but the most common is a 12-month auto-renew clause. With this, it continues to renew over and over until correct notice is given. Then there are freight factoring companies like Tetra Capital that don’t lock you into a long-term contract, allowing you to use their services only for as long as you want or need to.
- Collection times – Factoring companies account for the amount of time it will take them to collect final payment for your freight bill into the rate that they offer you. The collection times for factoring companies can vary widely from as little as two days to as many as 120 days. Tetra Capital offers one of the fastest collection times in the industry averaging 2-3 days faster than many of our competitors, which will save you money.
- Additional services that are included with the factoring fee – Some factoring companies won’t include any additional services with their factoring fee, but the good news is others will and they can save you a significant amount of money. For example Tetra, Capital will handle your invoicing, processing, postage, collections and more all for no additional cost.
- Submitting your freight bill for funding – There tend to be two ways a factoring company can require you to submit your freight bill for funding, either the originals or a copy. Having the option to submit only a copy will save you time, getting you your money faster.
- Application process – One big difference between partnering with a factoring company and a traditional bank is the application processes. You will find that the application process with a factoring company requires a lot less paperwork and time. On average the process can take 2-3 days with most factoring companies; however, with Tetra Capital it only averages 1-2 days.
It is important to for you to ask questions about these key differences when speaking with companies about utilizing their trucking factoring services. If you have any questions, we could help you with; please give us a call at (801) 676-0182 today.
