Freight Bill Factoring FAQ
Q: Who is a good candidate for trucking factoring?
A: In today’s world, the reality is almost any transportation company that creates an invoice is a viable candidate for trucking factoring. Factoring is ideal for any company that cannot afford to wait for payments owed to them. Far easier and faster than trying to secure a business loan, freight bill factoring can be set up quickly, helping you to stabilize your financial position and allow you the ability to pay for fuel, repairs and keep your drivers happy.
Q: How can factoring benefit my company?
A: Freight bill factoring provides an immediate increase in cash flow, allowing you to expand your fleet, more efficiently run your company, negotiate better rates on your loads and handle the unexpected. Your company will be in a more secure position to increase your ability to budget, forecast and plan more accurately. You can factor as much or as little as you want. Remember, factoring is based on the financial strength of your customers; this is another reason why freight bill factoring can benefit just about everyone.
Q: Is there a minimum I must factor?
A: There absolutely is NO minimum! There are no monthly, quarterly or annual requirements. You always remain in control by determining what invoices you want factored and only paying for the funding that you use. We strive to customize the process to fill your unique needs.
Q: Do I need to sign a long-term contract?
A: Long-term agreements are not required. You factor the invoices you want, when you want to. We believe we should earn your business every day!
Q: How do I get started and how long until I get funded?
A: Getting started with Tetra Capital is easy. Simply complete our application, and provide a few financial items, and the rest is history.
Typically, the initial process takes 3-5 business days; once you are set up we are ready to fund the same day. This is another reason why Tetra Capital is known for its superior customer service.
Q: Do I have to factor all my invoices?
A: No! You decide what to factor. This means you retain control of your business. You know your business better than we do. Therefore, you determine the fundings needed for your business.
Q: What happens if I sell you an invoice and my customer fails to pay?
A: In the event your customer fails to pay on an invoice and Tetra Capital is unable to collect, you will need to repurchase the invoice. Or, we can replace the old invoice with another invoice from another Debtor of your choice. We will still help you with collecting on that invoice and have resources available to assist you with that.
Q: What happens if Tetra Capital receives a payment from my customer that relates to an invoice I did not Factor?
A: Tetra Capital will forward those funds to you at no extra charge.
Q: How do I keep track of invoices I have factored and payments you receive from my customers?
A: We have a login directly to the software we use that will give you up to date information as well as allow you to pull reports on the history of your account.
Q: Do I need to tell my customers I’m factoring? And what will they think when they find out?
A: It is very likely that your customers are familiar with factoring. Freight bill factoring is not a new concept. It is a respected means of financing accounts receivable. Customers will be less concerned about your methods of financing; they are more concerned with you providing them great service.
Tetra Capital, along with your assistance, will provide notice to your customers with the Notification of Assignment. If you would like to make a personal call to your contact you are welcome to do so.
Q: How will my customers know that they are supposed to remit payments to you?
A: The Notification of Assignment has all of the remittance instructions on it for your customer. The letter clearly outlines the appropriate information for them.
Q: Am I eligible to factor if a UCC is filed against my company?
A: Yes. However, subordinations for 1st lien position on the accounts receivable is required. Often times Tetra Capital is able to acquire subordinations so we can continue to factor your accounts.
Q: My Company has a federal tax lien. Am I eligible to factor my accounts receivable?
A: Tetra Capital does not want to jeopardize their position and ability to collect on the accounts you have factored. A Federal Tax Lien means Tetra Capital may need to put in place a secondary account so that we are protected against any IRS levy.
Q: How do you approve credit limits for my customers?
A: We utilize the resources of multiple credit reporting agencies, which specialize in the transportation industry. We use these agencies to gather information to determine their credit limit. We also provide access to one of these at no charge so you can pull a customers credit 24/7 to help you determine if they are credit worthy.
Q: What is the difference between “recourse” and “non-recourse” factored invoices?
A: Invoices factored on a “recourse” basis means that the client is ultimately responsible for payment whether or not the customer pays. Factoring invoices on a “non-recourse” basis means that the factoring company assumes the credit risk of the customer (usually at higher rates), thereby protecting the client from possible credit loss. Tetra Capital purchases almost all invoices on a recourse basis, but we will work with clients on a non-recourse basis under specific conditions.
Q: How much does Tetra Capital charge for these services?
A: The fee is based on monthly dollar volume, number of invoices, the length of time it takes your customers to pay invoices and the credit of your customers. Additionally, our fee is absolutely all-inclusive!
Q: Do I have to pay a fee to get started or for you to process my application?
A: No. Tetra Capital has no application fees.
Q: When will I receive my money?
A: The amount of time it takes for you to receive funds depends on how you would like it. Bank wires and fuel card loading are typically done within a few hours of you submitting the paperwork. ACH/Direct deposits are done the same day as well with the funds hitting your bank the next morning.
Q: Do you only work with trucking companies in a particular area?
A: We work with trucking companies nationwide including Utah, Florida, California, Colorado, Michigan, New Jersey, Nevada, Alabama, Indiana, Massachusetts and Texas.
Q: Can freight bill factoring help my trucking company lower our fuel costs?
A: Yes, when you use Tetra Capital as your freight bill factoring company we can help you lower your trucking companies fuel costs with our fuel card program. Not only does our fuel card program offer discounted fuel prices, our fuel card program also offers discounts for tires, oil, roadside services, cell phones, load boards and many other offerings.
Q: What type of transportation companies can benefit from trucking factoring?
A: Transportation companies that haul all types of freight can benefit from trucking factoring; including refrigerated freight, dry van, flatbed, specialized and other types of freight.