Many truckers have or had similar problems with factoring companies and this article will explain the function of these companies, which are dedicated to changing invoices for money. What happens when you are not satisfied with your current factoring company? What should you do? We start searching for new factoring companies and after applying, we get a letter saying that our application was denied.
Then we wonder, why was it denied? The reason is because you still are client of your previous company. This happens because there is a contract and if the contract did not expire you cannot change from your current company. Factoring companies know when you apply to another company by the UCC, which indicates if there is a previous contract.
If you start working with another factoring company, the previous company has the right to remain in charge of your invoices until the contract is completed and you have paid all the services agreed in the contract. Therefore, if you don´t deliver on the agreement, your truck could be taken as warranty until you pay everything.
So, to work with a new factoring company you have to request a letter from your current factoring company, which indicates that you don´t have any contract with them anymore. Be sure to warn them in advance that you will stop working with your current company and if you do not do this, your contract will be renewed automatically.
You, as a truck driver and the owner of your business, must control the commission agreed with the factoring company. Usually these companies find ways to charge you more than what was agreed. For example, if you do not pay on time, these companies charge you an interest payment.
Factoring companies SALES are a real problem:
When buying a new factoring company, the buyer has to acquire all outstanding invoices and payment of termination charges. Buying the shares also cause confusion among brokers, who at first thought they were the ones having to pay the carrier. In that case you have to re-pay for the provision of factoring, which is a big problem.
We have to be careful with everything we sign. We must learn to read the entire contract. When you are searching for a factoring company always compare prices, services and terms in the contract. As the saying goes, “it’s better to be safe than sorry“.