Beyond the obvious benefit of having cash immediately after completing a load to keep your truck running, many companies do not consider many additional benefits to using a factoring company.
1. Nationwide Transport Finance, a non-recourse factor, assumes the risk of bad debt, thus eliminating this expense from your income statement.
2. We have a staff that is able to perform collections on your invoices more professionally and productively than you can. It is one less thing you have to worry about.
3. We handle much of the work associated with processing invoices, including addressing of the envelopes and mailing them to your customers, posting them to a computer system, depositing checks, entering payments, and producing regular reports. This can greatly reduce your current overhead cost.
4. With factoring, you can offer credit terms (or extended credit terms) to your customers without negatively impacting your cash flow. In other words, you can grow your business by making it easier for your customers to buy from / contract with you.
5. Factoring is the only source of financing that grows with your sales. As your sales increase, more money becomes immediately available to you. This gives you the ability to meet a constantly increasing demand.
6. Many companies offer discounts to their customers as an incentive to pay invoices early. With factoring, though, you receive your money immediately - so you don't have to offer early-payment discounts to your customers. This one change can save you 2-15 percent.
7. With factoring, you do not give up any equity in your company (as is usually required with venture capital) or take on any partners.
8. Factoring is not a loan, and therefore you are not incurring any debt. Your balance sheet looks good - and it is easier for you to obtain other types of financing or to ultimately sell your company.
9. Once you begin factoring and you have adequate cash flow, you can pay your bills in a more timely manner and start to establish, or improve, your credit. You get better credit terms from your suppliers and enhance your chances of getting conventional financing in the future.
10. The application required to establish a factoring relationship is much simpler than in any other form of financing. No tax returns are needed, no personal financial statements, no business plan, no projections, etc. And, financing usually occurs within one week of the receipt of a signed contract. How many banks do you know that operate that quickly?
11. Your company does not need to be creditworthy in order to factor. You don't need to be profitable or be in business for at least three years or meet any of the other credit criteria required by banks and other commercial lenders. If your customers are creditworthy, you can get financing through a factor.
12. With factoring, the principals of a company do not have to personally guarantee the repayment of the funding. You usually have to guarantee against fraud or disputes but not against your customers' inability to pay. Banks, on the other hand, not only require personal guarantees; they may also require liens on personal assets (such as your home).
13. Nationwide will provide you with detailed reports such as an aging and reserve activity reports on a regular basis, and any time you request them. You no longer have to pay someone internally to produce these reports - another savings. If you have Internet access (many truckstops now do), your account information is now available for you to check any time you wish - eliminating the need to wait for a faxed report.
14. Many people do not realize that some debtors pay factored invoices faster than non-factored invoices. Factors generally report payment experiences to Dun & Bradstreet, Experian, Compunet and Transcredit, while most clients do not. A debtor who is aware of this knows he may impair his credit rating by paying a factor slowly, whereas paying a client slowly may not affect his credit rating at all.
15. As a business owner, you often spend more than half of your time on collections, administration, bookkeeping, fending off suppliers, searching for capital, etc. Factoring frees you up to concentrate on marketing, building relationships with brokers and shippers, and growing your business.
16. With factoring, there are no geographical limits. Nationwide can work with you no matter what part of the country you are in - and your customers can be located anywhere as well.
17. Because we require that you call in and verify any new customer for creditworthiness (the first time you sell us a bill on that debtor) we help you avoid doing business with those customers that are not paying their bills or are going out of business. This is mutually beneficial to you and us in order to avoid those problem debtors.
18. Nationwide provides ongoing credit monitoring of existing customers to make sure there is no significant diminution in their credit status. In other words if you have done business with the debtor before and they go south, we will let you know.
If you have questions about our factoring program, we are willing to speak with you any time, without the "hard sell." Either give us a call at (800) 624-3353 or fill out our short form so we may contact you.