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Questions you should ask your factoring company before you sign the contract

TruckSmarter

Aug 15, 2023

Questions you should ask your factoring company before you sign the contract

For a trucking company or owner-operator, choosing whether to factor and selecting a factoring company are big decisions. Make sure you ask these questions before you sign a contract with a factoring company.

You should be able to get through these questions quickly if the factoring company you are speaking with is experienced, honest, and trustworthy. A good factoring company will be able to answer your questions clearly. Watch out for long-winded, non-transparent answers, which is a sign of poor customer service in the future.  

What questions should trucking companies ask before choosing a factoring company?

- How do you determine the rate I will pay? 

- What could I do that would cause my rate to be increased?

- What is my factoring rate?‍

- What other fees might I get charged upon set up and approval?

- What other fees might I get charged when submitting an invoice?

- What other fees might I get charged when transferring funds?

- How long will it take for me to qualify and get approved?

- How quickly can I get paid?

- How do I access my money?

- Is there a time I need to submit my invoices to get paid the same day?

- How do you define non-recourse? 

- What is covered by your non-recourse policy? 

- How does your company handle recourse situations? 

- What are your contract terms? 

- What do I need to do if I want to terminate my contract?

- What fees are charged for canceling my contract?

- How can I determine which brokers you will factor and how quickly do you review requests to factor a broker?

- What fuel benefits do you offer that I can only get if I factor with your company? 

- Do you process invoices over the weekend?

- Do you hold reserves and how do you manage them? 

- Do you have minimum requirements to keep my rate and factoring account open?

What is freight factoring?

‍Freight factoring is when a trucking company or owner-operator sells their invoice to a factoring company that’s experienced in collecting and processing accounts receivable (i.e., invoices). In exchange for paying the trucking company for their invoice on the same day or within a few days, the factoring company typically keeps a percentage of the invoiced amount as a fee for their services.

What are the benefits of freight factoring for trucking companies?

Freight factoring turns invoices into immediate cash and eliminates the waiting of weeks or months to get paid after each load has been completed. In addition to improved cash flow, trucking companies and owner-operators benefit from simplified billing and collections as well as reduced administrative back-office work. Learn more about the pros and cons for freight factoring here.

As we mentioned, choosing whether to factor and selecting a factoring company are big decisions. We hope this list helps you decide whether factoring is right for your trucking business as well as find the best factoring company out there. ‍

To learn more about freight factoring, visit trucksmarter.com/freight-factoring or contact our Chicago-based factoring team at factoring@trucksmarter.com.


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*TruckSmarter is a financial technology company and is not a bank. Banking services are provided by Thread Bank, Member FDIC and Blue Ridge Bank, N.A, Member FDIC. Deposits are FDIC-insured through Thread Bank and Blue Ridge Bank, N.A., Members FDIC. The TruckSmarter Visa Debit Card is issued by Thread Bank and Blue Ridge Bank, N.A., Members FDIC, pursuant to a license from Visa USA Inc. Your funds are FDIC insured up to $250,000 through Thread Bank and Blue Ridge Bank, N.A.; Member FDIC.

**Annual Percentage Yield (APY) of 3.27% is effective as of 11/01/2023. This is a variable rate and may change after the account is opened. Minimum opening deposit is $100 and you must maintain an average balance of $1,000 to earn the stated Annual Percentage Yield. Fees could affect earnings on the account. TruckSmarter is a financial technology company and is not a bank. Banking services provided by Blue Ridge Bank, N.A or Thread Bank, Members FDIC. ; Member FDIC. The TruckSmarter Visa® Debit Card is issued by Blue Ridge Bank, N.A. and Thread Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted.

***The TruckSmarter Visa debit card is issued by Thread Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used anywhere Visa or Mastercard cards are accepted. 

TruckSmarter Logo Asphalt Grey Footer

*TruckSmarter is a financial technology company and is not a bank. Banking services are provided by Thread Bank, Member FDIC and Blue Ridge Bank, N.A, Member FDIC. Deposits are FDIC-insured through Thread Bank and Blue Ridge Bank, N.A., Members FDIC. The TruckSmarter Visa Debit Card is issued by Thread Bank and Blue Ridge Bank, N.A., Members FDIC, pursuant to a license from Visa USA Inc. Your funds are FDIC insured up to $250,000 through Thread Bank and Blue Ridge Bank, N.A.; Member FDIC.

**Annual Percentage Yield (APY) of 3.27% is effective as of 11/01/2023. This is a variable rate and may change after the account is opened. Minimum opening deposit is $100 and you must maintain an average balance of $1,000 to earn the stated Annual Percentage Yield. Fees could affect earnings on the account. TruckSmarter is a financial technology company and is not a bank. Banking services provided by Blue Ridge Bank, N.A or Thread Bank, Members FDIC. ; Member FDIC. The TruckSmarter Visa® Debit Card is issued by Blue Ridge Bank, N.A. and Thread Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted.

***The TruckSmarter Visa debit card is issued by Thread Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used anywhere Visa or Mastercard cards are accepted. 

TruckSmarter Logo Asphalt Grey Footer

*TruckSmarter is a financial technology company and is not a bank. Banking services are provided by Thread Bank, Member FDIC and Blue Ridge Bank, N.A, Member FDIC. Deposits are FDIC-insured through Thread Bank and Blue Ridge Bank, N.A., Members FDIC. The TruckSmarter Visa Debit Card is issued by Thread Bank and Blue Ridge Bank, N.A., Members FDIC, pursuant to a license from Visa USA Inc. Your funds are FDIC insured up to $250,000 through Thread Bank and Blue Ridge Bank, N.A.; Member FDIC.

**Annual Percentage Yield (APY) of 3.27% is effective as of 11/01/2023. This is a variable rate and may change after the account is opened. Minimum opening deposit is $100 and you must maintain an average balance of $1,000 to earn the stated Annual Percentage Yield. Fees could affect earnings on the account. TruckSmarter is a financial technology company and is not a bank. Banking services provided by Blue Ridge Bank, N.A or Thread Bank, Members FDIC. ; Member FDIC. The TruckSmarter Visa® Debit Card is issued by Blue Ridge Bank, N.A. and Thread Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted.

***The TruckSmarter Visa debit card is issued by Thread Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used anywhere Visa or Mastercard cards are accepted. 

TruckSmarter Logo Asphalt Grey Footer

*TruckSmarter is a financial technology company and is not a bank. Banking services are provided by Thread Bank, Member FDIC and Blue Ridge Bank, N.A, Member FDIC. Deposits are FDIC-insured through Thread Bank and Blue Ridge Bank, N.A., Members FDIC. The TruckSmarter Visa Debit Card is issued by Thread Bank and Blue Ridge Bank, N.A., Members FDIC, pursuant to a license from Visa USA Inc. Your funds are FDIC insured up to $250,000 through Thread Bank and Blue Ridge Bank, N.A.; Member FDIC.

**Annual Percentage Yield (APY) of 3.27% is effective as of 11/01/2023. This is a variable rate and may change after the account is opened. Minimum opening deposit is $100 and you must maintain an average balance of $1,000 to earn the stated Annual Percentage Yield. Fees could affect earnings on the account. TruckSmarter is a financial technology company and is not a bank. Banking services provided by Blue Ridge Bank, N.A or Thread Bank, Members FDIC. ; Member FDIC. The TruckSmarter Visa® Debit Card is issued by Blue Ridge Bank, N.A. and Thread Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted.

***The TruckSmarter Visa debit card is issued by Thread Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used anywhere Visa or Mastercard cards are accepted.