Love it, like it, or hate it, most everyone out there has an opinion on invoice factoring. I’ll admit that prior to considering it for myself, I had heard horror stories about what other people had experienced in their choice to factor. My choice came out of necessity, but not necessarily the same need as a lot of carriers that go that route. Instead of a means to develop cash flow, mine was that of having too many invoices to process and too little time!
Always having my butt in the driver’s seat of one of the trucks in my fleet, you can imagine my time is spread thin. After driving my loads for the day, I usually come home to the office to sort out what I wasn’t able to business-wise while on the road. Unlike a typical OTR truck that might process 1, 2, or even 3 invoices a week, each one of my trucks typically has me processing 2 to 3 invoices per day! The opportunity to get out from under some of the back office work came when one of my reliable broker partners came to me with their new Factoring service, which could be used for any invoices whether it’s theirs or not.
After being given their spiel and looking over the fine print, it seemed like a decent deal. Not having educated myself heavily on invoice factoring previously, I was content with a simple fixed rate to process any invoice in a non-recourse format. Things were smooth and all, but had I known then what I know now, I would have been amazed at some of the other features factoring can be accompanied with at some factoring companies. I continued with them until a couple years ago when they were sold to my current, much larger factoring company, TBS Factoring.
Through the transition to where I have been now for a couple years, I have become even more delighted with what a legitimate industry leader in Factoring can do to make my back-office work less tedious. Not only am I able to receive my flat rate, non-recourse factoring with a simple submission of signed bills and a rate sheet. They also offer such services as fuel discount cards, free unlimited credit checks for new debtors, as well as a quick response from my direct account rep anytime there is an issue!
Now, I’m not here to make factoring seem like it’s the cure-all to your invoicing or cash flow nightmares. Not all factoring companies offer the support that makes them worthy of being considered a back-office solution like I receive. Having the ability to delegate the chasing of freight payments and invoicing of customers to a third-party, for the fraction of the cost of hiring someone to staff an A/R & A/P role, has allowed me better use of the little time I have to run my day-to-day operations. Be sure to analyze your particular situation carefully before considering the move to factoring. Take the time to understand exactly what it is that you need to get out of it in order to make the right choice benefiting your current and future position.