What is Factoring? Is it for You?

Over the last few weeks I received many emails asking who Financial Carrier Services is and what we do. When I responded that our main business is Factoring, the next question is, what is factoring? For some of you, the word Factoring might bring up terrible memories from high school math, but I assure you, it means something completely different in the transportation industry. This week the Trucking Tribune will be dedicated to answering the questions “What is Factoring” and “Is it for you“?

Before you can decide if you should take advantage of factoring you need to know what it is. The dictionary definition explains factoring as “The business of purchasing and collecting accounts receivable or of advancing cash on the basis of accounts receivable”. Sooo… What does that mean in plain English? All that definition is really saying, is that a factoring company would pay you up front for the freight you dropped off, and then that factoring company would wait the 30, 60, or 90 days to receive payment. In other words, Truck Factoring allows you to get paid right away and you can leave the collection process to someone else.

SO, WHAT IS THIS THING ABOUT RECOURSE VS NON-RECOURSE?

Non-Recourse factoring means that if your customer does not pay you are not held responsible. If you are thinking that sounds great, well there is always a catch. Non-Recourse costs a lot more. Also, Factoring companies that offer Non-Recourse only allow you to haul for companies with a credit score of 95 or higher. You would essentially be paying a higher price to only haul for customers that always pay you anyway. Does not seem like such a good deal to me.

Recourse factoring is the exact opposite. You pay a lower rate but you are held responsible if the customer does not pay. Some factoring companies offer a free credit check system for their clients. This would allow you to check the credit scores before you haul for a cheaper price. You can eliminate almost all the risk and still safe some money.

In the end, you have to decide which factoring style would be best for you and your company.

FREE CREDIT CHECKS? ARE THERE ANY OTHER PERKS?

Each Factoring Company is different. Some have perks and benefits to go along with getting paid the same day. I cannot speak for other companies but I know Financial Carrier Services has one of the best benefits packages in the industry.

Along with their industry low factoring rates, clients of FCS Inc get equipment and tag financing with no credit checks, fuel cards, insurance connections, discounted fuel tax services, and so much more I can't list it out.

Factoring companies are all different. Shop around and find the company with the best rates and benefits before you make a decision!

THANK YOU TO ALL THE TRUCKERS AND REMEMBER TO KEEP ON ROLLIN'

Feel free to give us a call if you have any questions or you would like a quick factoring quote. We are made up from top to bottom with former truckers. so we know that answers you will need!

Financial Carrier Services Inc.

866-899-7080 Then Hit 5 to have Questions Answered

info@carrierfs.com

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