{"id":34,"date":"2017-12-04T08:19:07","date_gmt":"2017-12-04T15:19:07","guid":{"rendered":"http:\/\/blog.adcomcapital.com\/?p=26"},"modified":"2024-12-16T10:14:24","modified_gmt":"2024-12-16T17:14:24","slug":"invoice-factoring-finding-the-best-rates-without-the-big-risks","status":"publish","type":"post","link":"https:\/\/www.adcomcapital.com\/blog\/invoice-factoring-finding-the-best-rates-without-the-big-risks\/","title":{"rendered":"Understanding Freight Invoice Factoring Rates"},"content":{"rendered":"

\u2018Low rates!\u2019 \u2018Risk-free!\u2019 \u2018Fast cash!\u2019 \u2018No upfront fees!\u2019 These are just a few of the phrases you see when you search for invoice factoring rates. You might find a number of deals from factoring companies advertising low rates and quick cash flow. This sounds good on the surface, but there are often many details that aren\u2019t disclosed upfront.<\/p>\n

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All too often, factoring rates and deals that sound great at first end up being too good to be true. \u00a0Many recourse factoring contracts come with fine print attached, putting you and your business on the hook for future risks. For example, when you sign a contract for recourse factoring, you assume the credit risk of the broker or shipper you are hauling for. This means you\u2019re essentially gambling on the reliability of the factoring company, with no guarantees they\u2019ll collect on your invoice. But because you\u2019re locked into a contract on their terms, those unpaid invoices will again become your responsibility after the terms of the agreement expire (usually 60 to 90 days).<\/p>\n

Low Factoring Company Rates: Understanding the Nitty Gritty Details<\/h2>\n

A lot of factoring companies advertise super-low rates to get more customers, but they don\u2019t always clarify the details. For example, did you know there are many ways for those \u2018lower rates\u2019 to change? Typically, the lower rate is introductory and only good for a certain number of days. After that, the rate will rise incrementally, sometimes even daily \u2013 yikes! Also, after an additional number of days, you must use your hard-earned cash and buy the delinquent invoice back from the factoring company. Talk about an unpleasant surprise!<\/p>\n

And there\u2019s more. With some of these \u2018low rate\u2019 deals, you\u2019re also locked into a contract of one or two years. These contracts are very difficult and sometimes very expensive to get out of. Unfortunately, such long-term agreements are hard to detect up front, because the contracts are so extensive and filled with confusing terms. As a result, you may not realize the full extent of what you\u2019re accountable for.<\/p>\n

Knowing the Bottom Line<\/h2>\n

When it comes to maintaining cash flow, factoring invoices at a good rate is a useful financial tool. However, since your main concern is the long-term health of your business, you want to avoid taking on unnecessary risk. To avoid damaging your business over time, consider non-recourse factoring with clear and reasonable rates, where you don\u2019t become responsible for invoices that go unpaid. While non-recourse rates may be a bit higher upfront, you\u2019ll avoid a lot of headaches, hidden fees and long-standing contracts \u2013 and that saves you money and hassle over the long haul.
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