Don’t get roped into a bad deal that could run you out of business.
It’s important to do your research before signing a contract with a Factoring Company. The best Factoring Company for you is one that gives you support and freedom with your business choices; helping you grow instead of sucking you dry. Make sure you don’t get stuck in a contract that inhibits your growth and dictates your business practices. Ask these simple questions before signing anything.
1
How long does your contract require me
to work with you?
Many contracts will lock you in for a year at a time, and will automatically renew for another year with out you knowing. In many cases terminating your contract early is not an option, or is only possible if you pay a huge termination fee. FactorLoads has no contract duration and no termination fees. We believe in keeping your business through program options, excellent customer service, and outstanding benefits.
2
What other fees do you charge in addition to the factoring rate?
Many Factoring Companies will have hidden or fluctuating fees. Make sure you know what you will be charged so you can make sure your profits stay high. Some common fees other than your factoring rate would be:
- Setup fees
- Penalty or charge for falling below the minimum monthly requirement
- Attorney fees in the event a dispute should arise
- UCC filing fees
- Termination fees
At FactorLoads we charge the bare minimum in fees. You will never get caught with extra small print costs. We understand this industry is seasonal and require no monthly minimums. You can also have a free agreement consultation whenever you want to make sure you know exactly what to expect.
3
Is there a reserve involved?
A reserve is an extra amount withheld from your pay in addition to the factoring rate. This amount is held by the factor for a certain amount of time after which it may or may not be reimbursed to you. If a reserve is required it’s imperative that the factor allows you to monitor how much is being kept, for how long, and when it will be reimbursed. FactorLoads does not require a reserve…EVER. Your business does not need your money locked up and out of your control.
4
Is the factoring fee a fixed rate or does it fluctuate out of your control?
Some factoring companies fluctuate your factoring rate without you knowing. Some base it on a monthly analysis of the economy and change your rate at the factors discretion. Others base your rate on the length of time it takes them to collect for an invoice. The longer it takes to collect, the higher the factoring fee. This gives them no incentive to collect quickly, as they will simply drain your pocket as the invoice ages. If the rate is subject to change your profit numbers are out of your control, which could drive your business into the ground. At Factorloads we have a flat rate that does not change. You will always know what to expect and what your profits will be.
5
Does the contract include a Power of Attorney?
Many contracts include a Power of Attorney clause where you sign over the rights for the Factoring company to control your company. With this clause they can sign legal documents in your name, divert and open your mail, and even pull money out your bank account with no prior notice at their discretion. Factorloads does not have a Power of Attorney Clause. We do not believe in trying to control your company at our benefit. We believe in giving you options and benefits to help grow your company.
6
Do I have to factor every load for every customer?
Watch out for contracts that require you to factor every load for every customer. This takes away the freedom to make decisions based on the needs of your company. FactorLoads has one of the only true spot factoring programs. You can choose not only which customers to factor, but even which loads you factor.
7
What’s the form of payment I will receive?
You will most likely be paid by ACH, EFS, or Comdata. Be sure to ask if there are any fees associated with the method of payment. FactorLoads uses Comdata as an exclusive method of payment. This gives us the ability to provide you with funds on a 24/7 basis. It also gives you the flexibility to draw your money from an ATM, direct deposit into your bank account, or get a discount when using it for fuel purchases.
8
What is and is not covered under your Non-Recourse Program?
A true non-recourse program will protect you from taking a loss on work you’ve completed if the freight customer does not pay. Many other factors have small print of monetary limitations or very specific criteria to be met in order for you to be protected. Make sure your Non-Recourse Program Protects you no matter what. At FactorLoads we offer a true Non-Recourse program with full protection. No small print, no booby traps, no problems, just protection so you can worry about doing what you do best… Moving loads.