As an independent trucker, you know how important it is to have enough money to take care of your daily operations. You cannot afford for your clients to pay you late or not pay you at all. Because you may have little control over the finances of your customers, however, it can be vital for you to secure a financial safety net to ensure that you will have the money you need to keep hauling. With freight bill factoring, you can have cash in hand and free yourself from the concern about your clients' finances.
However, before you proceed with factoring your freight funding, you should first make sure that you understand this process. Even more, you should address some of the more common concerns about factoring that independent truckers typically harbor about this option.
Recourse for Client Non-Payment
Even if you factor your freight fuel expenses, you still must address what will happen if your client does not pay his or her invoice. Before you sign the factor contract, it would benefit you to find out if the factor will seek recourse from you for non-payment or if you can have the cash you need without being liable for your client's financial negligence.
Clearing up this concern before signing the contract can be vital if you are operating on a tight budget and do not have a lot of room left over to cover such expenses. Asking outright prior to agreeing to a factor contract can help you avoid monetary dilemmas later.
Load Requirement Per Client
Along with finding out about the recourse for possible non-payment, you should also find out if the factor will require that you utilize this service for each load for that particular client. If you prefer to utilize factoring on a case-by-case basis, you would do better to choose a factor that allows this option rather than one that will lock you into an agreement for that particular client for which you are hauling at the time of the initial contract.
However, if you prefer to enter an agreement that allows you to factor each load for particular client, you should also ask about any possible discounts for doing so. Some factors could increase your funding if you lock into a contract with them agreeing to this option.
Additional Services for Factoring
Another important element of your factoring contract should touch on what other services the factor offers to you. For example, you should find out if the factor will perform a credit check on your client automatically or if you must pay for this service out of your own pocket.
Likewise, it would benefit you to ask whether or not the factor has a list of approved clients from which it will purchase freight fuel expenses. Having this information beforehand can save you the worry of whether or not your freight bill will be factored or if you must take the risk of the client paying you on time.
Deposits for Factoring
As with any contract, you should ask before signing about any deposits or upfront fees you must pay before your freight bill funding can be factored. It stands to reason that most factors will not advance out 100 percent of the bill. However, you should still find out what your percentage will be for this client and for every client in the future for which you plan to utilize this option.
As an independent freight hauler, you enjoy the freedom to choose what clients for which you will drive. However, you often have no say about how soon they will pay you for your efforts. Rather than experience delays because of a lack of funding, you can learn if factoring your freight bill would benefit you for some or all of your clients.