Two trucking companies – The Truck Depot and Long-Haul Trucking, both owned by Aurel Davidyan – teamed up Nov. 21 to give back to the Portland, Ore. community during the pandemic. Together, they gave away 300 turkeys to families in need, totaling to around $10,000.
How much fun do you have at your job?
A common question regarding any service is “why would I pay someone when I can do it myself?”
It’s important to understand the relief of allowing a factoring company to not only pay you right after the load has been delivered, but also to handle the back-office craziness for you. This includes deeper credit research on your customers (brokers and shippers), billing, and collections.
While the average time for brokers and shippers to pay is 30-45 days, about 60% of all invoices are paid late. When you submit your invoices to the factoring company, you will receive your payment same day or next day. After that, the factoring company deals with the responsibility of collecting… so you don’t have to.
Let’s take a look at 7 ways factoring improves your business and can help you grow to the next level:
- Instant Cash Flow
This seems obvious but it’s true. Waiting on your receivable to pay 30 to 60 days (or longer!) can lead to cash flow issues. Factoring gets you the funds right away allowing you to add staff, purchase equipment, pay insurance, and cover all the other necessary business expenses.
- Grow Faster
Factoring can assist in growing your company faster than if it were backed by a traditional loan. You are able to get factoring set up and working for you within a very short amount of time and let your factoring account grow with your company expansion.
- Additional Services
Your factoring company can free up your time as they will handle the collection and follow up with your customers to ensure payment of the full invoice.
- Experience (in trucking)
Having a factoring company that has experience in your specific field can be important to better understand your industry. Not just general business.
- Quality Customer Relationships
As the owners of the business, you will have to press a little harder sometimes when it comes to collecting on outstanding invoices from customers. By handing that responsibility over to your factoring company, it allows you to retain a stronger, positive working relationship while someone else does the collecting.
- No Debt
One of the greatest reasons invoice factoring is a prime option is because no debt is created. You are simply leveraging the collection of future invoices. This increases your cash balance and reduces your receivable balance. No loans to repay.
- Tools & Resources
There are very useful tools that many businesses capitalize on when partnering with a factoring company. Online credit checking allows you to ensure you are working with quality brokers and shippers. A partnered fuel card gives you the best discounts in the market. Factoring companies will generally have a solid network of insurance agents, dispatchers, and other useful resources to make the setup and day-to-day operations that much easier.
Remember to think beyond the factoring rate. What is the true value of that rate? Think about how an invoice factoring company can help make running a business each day more fluid.
Life on the Road During the Pandemic
While there are a lot of comparisons to the Great Recession of 2008, the good news is that there’s a strong difference where the 2008 crash was largely caused by bad business practices by major banks; we can point to a specific, external cause of this economic shock, and whenever that cause is resolved, there’s a chance things return to some normalcy quicker.
- Food Deals for Truckers
Cracker Barrel – Free coffee or fountain drinks offered to truckers.
Denny’s – 15% off your online to-go order through May 25 (promo code: Driver15)
Papa John’s – Receive 25% off all regular menu prices at Papa John’s (promo code: DELIVER25)
Starbucks – offering a free coffee to “frontline workers”
Texas Roadhouse – they are serving drivers right at their truck whenever possible
- Trucker Appreciation
Apparel brand expands its efforts to show appreciation to front line workers during this health crisis. Southern Tide joined forces with South Carolina Trucking Association in their “Thank a Trucker” campaign designed to provide aid through the sales of the brand’s hats and t-shirts.
- Help from the Truck Stop
Pilot Flying J donate $225,000 to four local charities. The Charities include St. Christopher Truckers Development and Relief Fund, Boys & Girls Clubs of the Tennessee Valley, Second Harvest Food Bank of East Tennessee, and United Way of Greater Knoxville.
- Giant Drive-Thru
Taco Bell headquarters turns into giant drive-thru for truckers. The kitchen will be serving up custom Cravings Boxes all completely free for the heroes of the highway that are driving large essential service vehicles. This includes truckers, EMTs, firefighters, police force, etc since they cannot fit in typical restaurant drive-thrus.
*promos and discounts outlined in this article from food and beverage vendors may be limited by location or schedule
All those people and truckload of toilet paper… with the back open. Be careful out there!
Here’s a fun game. Will these vehicles clear the bridge or not? Some feel quite confident that they will. Let’s tally the Cleared vs the Crashes.
CHOOSING THE RIGHT FACTORING COMPANY
Searching for the right factoring company takes a little extra diligence but can definitely be time well spent to avoid headaches later. A little homework can go a long way so you don’t end up settling on a factoring company that may not be the best fit. We have a few key items to look at that go beyond just the factoring fee so you can make the best decision for your company.
DO THEY HAVE EXPERIENCE?
A critical component when it comes to finding a quality factoring company is experience. You want to look for a company that has history in working with businesses like yours and has been around for a decent length of time. Although, just because a factoring company is new to the scene doesn’t make them an inadequate option, but they haven’t necessarily invested the time dealing with the many aspects of what and how your industry operates. The more they know and understand, the smoother the process of funding will be and the lower your overall risk will likely be.
HOW FLEXIBLE ARE THEY?
We all love a little flexibility in our options. It is recommended that you choose a factoring company that allows you to choose which customers you’d like to factor. Stay away from terms that require you to factor your entire book of customers. If you have a customer that pays you fast already, you may not want to pay a factor fee on that. Always look for a factoring company that can provide you with the program that will serve your interests best, not the other way around.
WHAT DOES THEIR CREDIBILITY LOOK LIKE?
If you’re going trust a company to ensure you are getting paid on time, make sure they have a positive reputation in the industry. We live in a world that is easily defined by reviews so it shouldn’t take much to find what other are saying about the factoring option you are looking into. While a few negative reviews are common; you’ll want to make sure the positive reviews outweigh the negative. Examine how the factoring company responded (if they responded) to the negative reviews.
Look for a company that is part of an association like the International Factoring Association (IFA). Typically these associations vet out the companies they work with.
WHAT CUSTOMER SERVICE RATINGS DO THEY HAVE?
It’s easy to look at the price-tag before looking at the value but the level of customer service is so critical when choosing a factoring company. You should be building a relationship with a dedicated customer service representative, so they gain a strong understanding of how you and your business operate. The factoring company will not only be interactive with you and your team, but also your customers. You’ll want them treating your customers the way you would treat them. Checking a factoring company’s referrals and reviews can help in this department.
DO THEY ALLOW YOU THE ABILITY TO GROW?
As your company grows, so will the number of invoices and your funding needs. Can the factoring company handle your needs of tomorrow? What’s their largest client size? Is there a limit to the quantity of debtors they can take on? An invoice factoring company that has been around for several years will usually have the ability to handle larger capacity. Can they grow with you?
Factoring is a great way to free up working capital to pay bill and staff faster. A little research on the front end will allow you to find an invoice factoring company that provides the transparency, flexibility and customer support that best fit your company.
If you’re in the process of looking or simply have questions, we’d be happy to help. Give us a call: 800-727-3377.