As good as the factoring truck loads concept is, with a lot of advantages, it still has its cons. Every business, regardless of its size or origin, needs to weigh the benefits and drawbacks of a product or service before utilizing it for their business operations. We’ve looked into and made a list of the pros and cons of using factoring companies.
Pros of owner operator factoring
- Swift disbursement of funds.
- Unlike banks, your credit score or history is not much of a factor.
- Avoiding debts.
- Financial flexibility.
- You don’t have to worry about payments from the customers.
- Free credit checks on potential customers.
- The value of your business isn’t lost or damaged.
- Steady cash flow
- It’s easy to get approved, and the process is quick.
Cons of owner operator factoring
- Bills must be paid in full by or before the due date on the invoice.
- To be approved, you must have good-paying customers.
- Rates can sometimes be too expensive and higher than the normal bank loan rate.
- Customers are notified when you change their payment address.
- You may be held accountable if your customer doesn’t pay.
- With so many disadvantages to freight factoring, its pros still outweigh its cons.
- Always double-check the form you are given to fill out before signing up for the services of a freight factoring company. Make sure to ask for clarification on any part of the agreement you do not understand, such as the factoring rates on a freight invoice.