Choosing the right freight factoring firm is an important business decision that should not be taken lightly. It can be challenging to choose the right partner for your business because of the numerous freight factoring companies in the market. You need to consider several factors when choosing a freight factoring company to ensure your business operations run smoothly and achieve your goals.
Here are important factors to consider while looking a freight factoring company;
- Experience
Experience is very crucial when choosing a Hawaii factoring firm. You need to select a factoring firm that has been operating for some time, working with other clients in the similar industry as you. You should look at how the factoring company serves other clients in logistics.
The more years a factoring partner spends working with logistics companies, the more they understand the operations processes and make more thoughtful and elaborate funding. A factoring company that has more experience in the industry will ensure the function of your funding is smooth and fewer risks.
- Fee of factoring
When choosing a factoring, pay attention to the factoring fees and rates the company offers. Inquire about their rates, approval process, and commitment requirements. Factoring companies establish factoring fees monthly, quarterly, or yearly total sales. Some factoring firms have a no-minimum policy. Ask for more details about the contract and ensure you read the agreement keenly to avoid other hidden charges before signing it.
- Flexibility of terms
When looking for a factoring partner, you should contemplate the flexibility of terms. A long-term agreement with a factoring firm can be good if it has flexible rates and price breaks. However, some factoring firms might change their rates established on accumulative factored invoices or better deals from other companies.
Choose a company that gives you the flexibility to pick which clients you need to factor. Avoid agreements that necessitate your business to factor your whole book of clients. Altogether, it is unreasonable to factor a client who is prepared to pay instantly. Select a company that is willing to serve your interest.
- Recourse and non-recourse factoring
A recourse agreement means you will be responsible for the unpaid invoices. You have to repurchase the invoice. The factoring company will take a percentage of incoming cash to settle the due invoice. A good factoring firm should try to make efforts to collect the invoices before returning them to you.
A non-recourse factoring company takes the risks of unpaid invoices. However, it is only applicable if the client is bankrupt within a given period when your company sent the invoice. Non- recourse factoring helps to reduce the risks of not getting your payments.
- Customer reviews
Reading customers’ reviews will provide you with insights into how the factoring company treats its customers. A good factoring company should treat its clients with professionalism and courtesy. You can check out customers’ reviews on Google and decide if you are satisfied with the company’s customer service.
Bottom line
Choosing the right factoring company is vital for the long-term success of your business. The strategic way of finding an excellent factoring company is researching the company and asking their representative all direct questions to determine if they are suitable for your company.