The beauty of Invoice Factoring is that it is a perfect funding option when all other traditional forms of Financing fail. Banks are risk averse to a degree proportional to the kind of funding they provide. Many banking institutions have regulations, investment stipulations set by government, and a portfolio that needs to remain balanced and secure. What does this translate to? A lot of folks getting turned down for the funding they need to grow their business because of credit, or length of time under operation. However, Factoring Services can be discriminatory as well.
This is where a Factoring company comes in. You just walked out of a bank or got a phone call from a banker and they told you that you don’t qualify for the funding you requested. You call up a local Factoring company and you tell them your situation what you need the funding for, and they tend to ask you more questions about your customers than about yourself. They approve you for funding, and now you have some form of capital to grow your business. Sure, it’s a little bit more expensive than a traditional loan, but there’s less risk protection, its transactional and can be used temporarily, and best of all there’s no payments to be made back. This is what entices most trucking companies and owner operators.
However, what happens when a Factor decides that your line of work is too complicated and isn’t worth the effort it would take to maintain the contract? This is a scenario that happens daily to both owner operators and car carriers.
An owner operator operates a trucking company out of a single truck. This single truck produces the entirety of the revenue this company earns. Meaning, the numbers aren’t very big. These smaller deals are considered undesirable and are often met with higher than average fees if not a total rejection of the business. It is in these scenarios that Micro Factoring could be an option. Owner operators love us because our rates stay reasonable even if the volume isn’t there. Plus, we’re willing to entertain these deals to begin with.
Car carriers are discriminated upon for a set of different reasons. Sometimes, even oftentimes, these car carriers bring in a high volume of revenue, however the quality of their receivables tend to be lacking. And that isn’t to say that their customers are not creditworthy. The nature of car carrying is a careful logistical dance of pick up at one location and drop off at multiple. Unloading and reloading, picking up and dropping off presents a higher probability, statistically speaking for damages and complications to occur. This results in chargebacks and tracking down individual customers and dealerships as well as Central Dispatch to secure full payment. It’s for this reason that a traditional Factoring company would reject car carrier deals.
However, AA Bankers understands the Car Carrier. We understand their needs, and we understand how they do business. We are willing to factor car carriers and advance them funds on dealership Invoices, as well as smaller customers should they prove to be credit worthy.