You know, there is a certain point everyone hits in their business where you consider a business or service partner. But there are a lot of considerations to take in when choosing the best partner.
It’s especially important when partnering includes obligating yourself or your business under some form of an agreement – like a Factoring Agreement. Trust and transparency are key as it helps you be less fearful of getting into a relationship based on an agreement.
Take your factoring partner, for example. Were you helped to clearly understand the entire agreement, or were you just rushed into signing something, that in the back of your mind, you were worried that you might regret it later?
In my twenty-three years helping truckers with their cash flow, one of the most frequent complaints I hear about is how egregious factoring agreements are.
Find a factoring company that will invest time in your concerns and questions and in making sure that you understand the entire agreement before you sign it.
The reality is that factoring agreements are meant to protect both parties. If you are clear going into the relationship—in other words, your factoring company took the time to explain the terms of the agreement with you—you will see that the agreement isn’t all that scary.
After all, agreements are only scary when you don’t know what’s in them.
These are the three key things you should ensure when seeking a factoring agreement:
- A company that is willing to take the time to explain every element of the agreement
- Ask questions you have about the agreement; the factor should happily provide you with answers
- Confirm that all key terms you discussed with your sales rep are reflected in the agreement
- Advance rate
- Fee Structure
- Contract term length
- Recourse period
- Money disbursement Fee
If you are in a situation with a company that is not willing to do these three things, then you should walk away. Don’t let them make you feel like you aren’t in control.
Watch out for hidden fees
Understanding the agreement is number 1, but close after is ensuring you double-check for good ol’ hidden fees. If you don’t consciously check for them in your agreement, it’s going to unknowingly jack up your cost of funds.
We’ll even give you a hint on where to keep an eye out for them:
- Invoice creation fees
- Schedule processing fees
- Credit checks fees
- Copy fees
- Postage fees
These are just a few of the fees I’ve seen over the years.
If you want a factoring relationship where it’s more of a partnership, reach out to us.
If we get as far as signing you up, we will walk you through our agreement page by page. We believe in transparency. The more we know about each other, the better our relationship will be.
Express Freight Finance is smarter by the mile.