In our Transportation Tuesday series, we’re partnering with industry leaders to share tips on how you can improve your business success and growth. This week’s tip is brought to you by OTR Solutions.
We’ve all been there: you get a call from your factoring company and are told a load you factored a few months ago never paid, and they need to charge it back. In order to charge it back they need to deduct the full invoice amount from your next funding.
You immediately call and ask the broker, “Why didn’t you pay on this load?”
They respond simply with, “We never received the invoice.”
It’s expected that your factoring company will get paid. Regardless of a broker’s credit rating, factoring approval, or history, the critical component of payment is a timely, complete and legible invoice. If there are any invoice issues, the broker is not going to pay.
Many freight factors place responsibility on customers — like you — for invoicing errors even if they’re the ones at fault. These companies pass the debt back onto you after a certain period, usually between 60 – 90 days. Since they can pass the debt back on to you, their back-office billing and collection teams are less motivated to work on your behalf.
So how do you know if your factoring company is properly invoicing and collecting payment on your loads?
It’s important to partner with freight factors that offer true non-recourse factoring programs that make themselves responsible for errors in handling a company’s invoices. This means that the factoring company is liable if a broker doesn’t pay – not you.
If you’ve come across the following events, you may want to start looking for other factor companies:
- Brokers regularly call you asking to be invoiced for loads you already factored
- Your factoring company consistently requests paperwork for loads factored months ago
- The age of your unpaid invoices averages 45 days or more
- Finding resolution on flagged/claim loads is prolonged past the normal window
When factoring companies invoice your brokers quickly and correctly, the opportunity for payment issues is extremely low.
Dealing with problems caused by erroneous billing can be time- and resource-intensive, cutting deep into your margins. This is why it’s imperative that your factoring company acts as a partner in the relationship by doing its part to support the success of your business.
Have a tip to share or want some advice?
If you want to share your own insight and be featured in our next Transportation Tuesday Tip or if you want us to dive deeper into a challenge you’re facing, email us at tips@dat.com.
About OTR Solutions
OTR Solutions is a factoring company that offers access to quick, easy, and affordable funding for small, medium, and large companies. It’s dedicated to providing the best factoring experience to customers by helping them increase cash flow and grow their business.
You can rely on OTR Solutions for:
- True non-recourse factoring
- No hidden fees, no monthly requirements
- Free broker checks
