10 Must-Ask Questions to Find the Best Fleet Factoring Company

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Maintaining a steady cash flow is crucial for fleet companies to maintain operational efficiencies and pay their carriers on time. With the average operational cost of running a truck at almost $2/mile and fuel costing anywhere from $50,000 - $70,000/year per truck, it’s no wonder that factoring services for fleets are becoming more popular.

Fleet factoring offers a viable solution for trucking fleets to manage their finances by converting unpaid invoices into immediate cash. However, choosing the best factoring company requires careful consideration. 

Here are some questions you should ask to ensure that you partner with the best fleet factoring company for your needs.

1. What type of fleet factoring do you offer?

Factoring companies typically offer two types of invoice factoring solutions: recourse and non-recourse

With recourse factoring, the trucking fleet remains responsible for unpaid invoices if customers don’t pay.

Non-recourse factoring transfers the risk of non-payment to the factoring company but it can come with a significant increase in expenses, fees, and restrictions on your business and clients (check out our list of alternatives to non-recourse factoring). 

At Denim, we offer recourse factoring because it’s the best way to serve our clients and allows us to offer lower fees, a flexible time-to-pay, and quick processing. When paired with other risk mitigation strategies, recourse factoring is often less expensive and has fewer restrictions on your business than non-recourse factoring. 

2. What is your fleet factoring rate?

Factoring fees in trucking can vary widely among companies and may include advance rates, discount rates, and other additional charges.

At Denim, our factoring rate ranges from 1-3%, depending on your volume and/or value of monthly factoring. Customers can leverage Denim Flex Factoring for time-based discounts by delaying your advance. Calculate your potential rate with our flexible factoring calculator or  schedule a demo to see what factoring rate you qualify for. 

3. Are there any additional fees?

In addition to a company’s factoring fee, they may also have additional fees or charges such as: 

  • Administrative Fees
  • Application Fees
  • Monthly Minimums
  • Termination Fees
  • Invoice Processing Fees
  • ACH/Wire Transfer Fees

Some fees are very common, but it’s important to be aware of all of them so you know your total costs of factoring. 

4. What is the contract length and termination policy?

Before committing to a fleet factor, you need to understand the terms of the contract and the implications of terminating the agreement early. Most companies require a minimum year commitment to cover the costs of onboarding. However, some terms can be as long as three years, which is limiting to a growing business.  

Many factors have early termination fees to protect their investment. Lenders invest a lot of time and resources upfront to make a client successful. Normal termination fees range from 10-15% of the volume, but can be as high as 50%. If a trucking factoring company is charging a high termination fee, consider if this is a vendor you can trust and has your businesses best interest in mind. 

At Denim, our standard agreement starts at 12 months and then renews yearly. We require a 30-day out and charge an early termination fee of 10% of volume to cover administrative costs and UCC filings.

5. How quickly will I receive funding?

One of the primary benefits of fleet factoring is the ability to receive cash quickly. For example, fuel card bills need to be paid a few times a week, and a late payment could put your credit at risk. 

Understanding a factoring company’s funding timeline is critical to avoiding common cash flow mistakes. You need to know the cut off time to submit an invoice, and the earliest you can be paid. Additionally, you can inquire about redundancies in place to ensure payments are made in the event of a bank failure or outage. 

We offer 24-48 hr funding. If you upload an invoice on our dashboard by 12:00pm EST the payment is guaranteed the following business day. 

6. What is your customer service like?

Working with a fleet factor that values customer service is crucial. Evaluate the factoring company's customer service by asking questions like:

  • What are your customer service hours?
  • What does your onboarding process look like? 
  • Do you offer support through phone, email, and online chat?
  • How quickly do you typically respond to inquiries?

Every Denim customer is partnered with a dedicated account manager who will walk you through the dashboard, answer any questions you may have, and even help you upload your first invoice to remove any guesswork. 

7. How do you handle collections?

Fleet factoring companies usually take over the responsibility of collecting payments from your customers. It’s important to understand their approach to collections to ensure it aligns with your company’s values and customer relationships.

At Denim, we help fleet companies simplify their collections. We specialize in debtor management, helping ensure that even the most difficult contractors fulfill their payment obligations. This way, you can focus on your primary goal - propelling your business towards sustainable growth.

8. Do you have experience in the logistics industry?

Many factoring companies may appear promising on paper, but it's crucial to verify if they possess specific experience in fleet operations. Factoring companies with a background in logistics are better equipped to grasp the unique challenges and needs of trucking fleets. This expertise leads to enhanced service and solutions tailored to the complexities of the transportation industry.

Denim was built specifically for the freight industry. All of our teams, from the executives to sales and customer service, have team members that have spent time in the logistics industry before coming to Denim.

9. Do you offer fuel cards?

Fuel cards can be a great tool for fleets to control spending, monitor employee spending, track expenses, and simplify reporting. Fleet companies can distribute them to their team and link all their transactions to one company account. 

When looking for a factoring company, ask if they offer fuel cards with features that are specifically designed for fleet management, such as automated accounting and tools for simplifying IFTA record-keeping. For example, our Denim Fuel Card gives fleets fuel discounts of up to $0.84/gal and combines tech-forward factoring with fuel optimization solutions. 

10. Can you provide references or testimonials?

Reputable factoring companies for trucking should be able to provide references or testimonials from satisfied clients. This can give you insights into their reliability and service quality. 

Check out our Success Stories to see how Denim has helped carriers and fleets simplify their back office operations and grow their business!

Conclusion

Factoring services for fleets can significantly improve the company’s financial health and operational efficiency. By asking these questions, you can ensure that you partner with a factoring company that offers transparency, fair terms, and an understanding of your fleet company’s needs. 

At Denim, we’re more than just a factoring company, we are your financial partner. We offer best-in-class finance tools and dashboards to help you secure cash flow and streamline your back-office operations. Contact us today to get started.

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