Running a trucking business can become expensive. Your company's finances might start to become worrisome to you, particularly if some of your clients are taking a while to pay. You might seek out a factory company that can take over your accounts receivable; these companies pay you what clients would have paid you, upfront, so that you can take care of other business needs. They charge you a fee for that service and collect payments directly from your clients. However, in order to ensure that your partnership with them is a good one, ask these questions before signing a contract.
What Records Do You Require?
The idea of a factoring company giving you money to run your business and letting them worry about your slow-paying customers can be exciting. However, you need to know that every factoring company has their own criteria your business must meet before they agree to work with you. Knowing the records they'll require can expedite the approval process. Typically, factoring companies will request your company's credit records and similar information about your clients.
Can I Only Include Some Clients in the Contract?
Not all of your clients are slow to pay you. If you want to continue to handle those accounts, you need to select a factoring company that will be flexible instead of requiring you to include all your clients in the contract you sign with them. Generally, the more risk a factoring company takes on, the higher your fees will be, so if you can retain some of your clients, you may end up paying less money throughout the life of the contract you enter into.
Can You Offer a Non-Recourse Contract?
Of course, there are times when slow-paying clients turn into non-paying clients. Different factoring companies handle this in different ways. Some companies would have you sign a recourse contract of some kind, in which you would then resume responsibility for that client after a particular time period. Others allow you to sign a non-recourse contract where they absorb all of those costs. You may prefer a non-recourse contract so that you can move ahead without having to worry further about clients that don't pay.
With the questions in this article, you can find out whether a particular factoring company is suited to the needs of your trucking business. Consult a number of factoring companies in the area, such as Factor Loads, to find out how they may be able to best assist you.Share