Answers to Your Freight Factoring Questions
Truckers, we asked you to submit your freight factoring questions, and now Phoenix Capital Group is ready to answer them for you!
What are the benefits of freight factoring?
A: Freight expenses grow quickly and frequently takes months for individual truckers or trucking company to be reimbursed. Freight factoring provides truckers with immediate cash so you can focus on growing your business. So not only do you have cash in your pocket faster, it’s a less frustrating process!
I’ve heard there are two different types of factoring, can you explain this?
A: Phoenix Capital Group offers recourse freight factoring and non-recourse freight factoring. Recourse freight factoring makes up most of the accounts receivable financing industry. When you make a recourse factoring agreement, you and your factor both acknowledge that you are responsible for buying back invoices that aren’t paid by your customers after a predetermined period of time, which could be 60, 90 or even 120 days. Non-recourse freight factoring means that the factor assumes the risk of non-payment by your accounts. With non-recourse factoring, your business is safe from the cost of bad debt, but the discount rate will be higher than it is for recourse factoring since it is a higher risk for the factor. Even with higher discount rates, many truckers see non-recourse as a promising agreement because the cost of an unpaid invoice is a much greater loss.
Is there a minimum or maximum amount PCG will fund for a client?
A: No, there is not a minimum or maximum amount that Phoenix Capital Group will fund for a client. We accept transportation companies and invoices of all sizes.
Do I have to sign a long-term contract?
A: No. Our typical factoring agreement is simply on a month-to-month basis. This allows us to earn our client’s repeat business every single day that we work together.
How quickly will I receive my money?
A: As long as we receive your paperwork by the submission deadline, we will process the funding that same-day. We offer immediate wire transfers and fuel card funding as well as next day ACH options.
Do you accept copies for funding?
A: Yes. We will fund all invoices based on copies, typically by email or fax. Even if your customer requires original paperwork in order to pay, we will still factor those loads from the copies and work with you to submit the originals in a timely manner.
What happens if my customer does not pay you back?
A: We offer two different types of factoring programs. Under the recourse program, customers are generally expected to pay us within a 60-90 day window. If the customer does not pay us back within that time period, we will work with you to reimburse us for the missing payment. However, we also offer a non-recourse program where you will not be expected to reimburse us if your customer does not pay due to bankruptcy or insolvency.
Are there any hidden fees?
A: The only other fee, aside from the contracted factoring fee, is for your preferred funding method. Depending on whether you would like to be paid by wire transfer, ACH, or fuel card deposit, these fees will vary. However, there are no set up fees, no termination fees, no invoice processing fees, or any other charges.
Once I start factoring, how do I get my new customers approved?
A: You will be given access to our website where you can request credit on new customers or credit limit increases on existing customers. Additionally, you will be able to run accounting reports from the website. Some examples are accounts receivable aging reports, collections reports and purchase reports.
Does Phoenix Capital Group give fuel advances?
A: Yes. Once your truck is loaded, you will send the rate confirmation sheet and bill of lading to your account manager who will transfer the funds upon verification with your customer that the freight has been loaded. Contact us to learn more about our fuel card program.
I’m a new truck driver, once I am a freight factoring client, do I have to factor everything?
A: No. You factor only those customers that you want.
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