Subscribe to our Newsletter
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Introduction
Brokers
Back-office

3 Steps to Reduce Calls from Carrier Factoring Companies

Consistent freight payments at net-30 days are your secret weapon to silencing carrier factoring calls.

23 Jul
2024
4
min read
Introduction
Introduction

If you’re a broker that works with carriers that factor, you know how annoying the constant calls regarding payment from their factoring companies are. These calls can be a significant drain on your time and efficiency and not only disrupt your workflow, but can also lead to unnecessary stress and frustration. 

But wait, isn’t Denim a factoring company, as well? Yes, but we specialize in factoring for freight brokers and fleets. Carrier factoring companies provide liquidity to owner operators and smaller carriers to help them manage cash flow, pay for fuel, maintenance, and other operational costs.  They advance a payment to a carrier and then contact you for that payment.

If you’re tired of the calls from carrier factoring companies that are trying to chase down payments, here are 3 steps to minimize these calls and improve your day-to-day operations.

Step 1: Find Your Average Days to Pay for a Carrier’s Factoring Company

The first step to reducing calls from carrier factoring companies is understanding your average days to pay for their invoices. This freight brokerage metric is crucial as it determines when factoring companies expect payments and influences their follow-up frequency. 

Average days to pay definition for freight brokers

To calculate your average days to pay:

  1. Gather your payment records for the past few months for each carrier.
  2. Calculate the number of days between the invoice date and the payment date for each transaction. If you factor with Denim, we can pull this report for you.
  3. Calculate the average of these days per carrier.

By knowing your average days to pay for a carrier, you can better anticipate when factoring companies might start reaching out. This awareness is the foundation for the next steps in reducing those calls.

Step 2: Understand the Average Days to Pay for Carriers' Factoring Companies

Factoring companies track your average days to pay, and use the metric as a benchmark. If you pay beyond the average, they will likely start contacting you, regardless of your contractual payment terms.

For instance, if you usually quickpay (1-2 days), factoring companies will expect this prompt payment consistently. Any delay, even if minor and within your agreed terms, can trigger persistent follow-ups.

Here's why this happens:

  • Factoring companies compile a list of invoices that are past the debtor’s average days to pay each month. This raises red flags for carrier factoring companies because any variance outside of average days to pay could be a sign of cash flow or liquidity issues.
  • If you appear on this list, you will be subjected to increased follow-up calls and emails.

In order to effectively manage this, it is important to make regular payments. One convenient way to achieve this is by partnering with a freight factoring company like Denim, which offers a days-to-pay feature. This feature automatically sends payments a specified number of days after the date of the invoice. By maintaining this consistency, the need for follow-up communications will be greatly reduced.

As carrier factoring companies typically have a large workforce, it is impractical to engage with their collections team. The best approach is to avoid getting on their list altogether, which can be accomplished by consistently making freight payments on time.

Step 3: Shift Payment to Net-30 Days, If Contractually Feasible

One strategic way to reduce calls is by shifting your payment terms to Net-30 days, if possible. This approach offers several benefits:

Flexibility

You have more time to manage cash flow and handle unexpected delays without immediate pressure from factoring companies.

Reduced Follow-ups

Factoring companies typically check outstanding payments on a monthly basis. With consistent net-30 terms, you are less likely to appear on their follow-up list. We recommend paying in 27-28 days to stay below net-30 business days.

A Better Score

Net-30 payment terms are often favorable in credit reporting with agencies like Ansonia, which can enhance your reputation and reduce hassle.

As you build up your average days to pay to 30 days, you will likely still receive calls. Remember, creating a new average takes making Net-30 payments consistently for multiple payments. It won’t happen overnight, but eventually you will notice less calls from carrier factors. 

What About Your Credit?

Delaying your payment to carrier factoring companies might seem like the opposite of what you want to do if you want to build credit, but in reality, delaying payment may actually improve your broker credit score. 

This is because some of the largest carrier factors don’t report payments to business credit bureaus like Ansonia if they are paid faster than 30 days. Some will only report open balances once a month. So if you are consistently paying down the balance as soon as it’s open, your volume will not be reported. A Net-30 day score is considered perfect with Ansonia.

Will Delaying Payment Impact My Carrier Relationships?

Carrier relationships your business. One of the main benefits of using a platform like Denim is to strengthen carrier relationships through transparency and quick payments.

In the steps outlined above, you are paying the carrier factor, not the carrier directly. Because of this, delaying payment and not quickpaying won’t have any impact on your carrier relationships because your carriers are still getting paid on time. 

Reduce Carrier Factoring Calls With Denim

By finding your average days to pay, understanding the expectations of factoring companies, and shifting to Net-30 payment terms when feasible, you can significantly decrease these interruptions and enhance your operational efficiency.

In addition, working with a freight broker tool like Denim can help alleviate some operational stress. Not only is our platform designed to help you build strong carrier relationships, but we often have relationships with carrier factoring companies so we can provide guidance on ideal average days to pay. 

We help brokers optimize their back office operations, including paying carriers, to grow their brokerage. If you’d like to learn more, request a quote today.

Key Takeaways
Save time on accounting and reconciliation

Download now

Why it's a problem

Thousands of small transactions make it harder to track financial health.

A Smarter Solution
Time for a Change

There’s a better way

Struggling with slow invoicing and cash flow challenges?

Denim’s automated solutions streamline your back-office operations. Explore our solutions to see how Denim can help your business scale efficiently.

Summary
Deeper Dive
1. Simplify Your Accounting Structure

Problem: Overcomplicated books with too many manual entries.


Solution: Use accounting software that integrates directly with your factoring and invoicing platform to reduce redundant data entry and improve accuracy.

2. Automate Invoice Processing
3. Gain Real-Time Financial Visibility
4. Improve Carrier Payment Processes
5. Make Data-Driven Decisions

Be part of the change hundreds are experiencing

Know a trucking company that could benefit from Denim?
Refer them and you’ll both enjoy the rewards.

3 Steps to Reduce Calls from Carrier Factoring Companies

If you’re a broker that works with carriers that factor, you know how annoying the constant calls regarding payment from their factoring companies are. These calls can be a significant drain on your time and efficiency and not only disrupt your workflow, but can also lead to unnecessary stress and frustration. 

But wait, isn’t Denim a factoring company, as well? Yes, but we specialize in factoring for freight brokers and fleets. Carrier factoring companies provide liquidity to owner operators and smaller carriers to help them manage cash flow, pay for fuel, maintenance, and other operational costs.  They advance a payment to a carrier and then contact you for that payment.

If you’re tired of the calls from carrier factoring companies that are trying to chase down payments, here are 3 steps to minimize these calls and improve your day-to-day operations.

Step 1: Find Your Average Days to Pay for a Carrier’s Factoring Company

The first step to reducing calls from carrier factoring companies is understanding your average days to pay for their invoices. This freight brokerage metric is crucial as it determines when factoring companies expect payments and influences their follow-up frequency. 

Average days to pay definition for freight brokers

To calculate your average days to pay:

  1. Gather your payment records for the past few months for each carrier.
  2. Calculate the number of days between the invoice date and the payment date for each transaction. If you factor with Denim, we can pull this report for you.
  3. Calculate the average of these days per carrier.

By knowing your average days to pay for a carrier, you can better anticipate when factoring companies might start reaching out. This awareness is the foundation for the next steps in reducing those calls.

Step 2: Understand the Average Days to Pay for Carriers' Factoring Companies

Factoring companies track your average days to pay, and use the metric as a benchmark. If you pay beyond the average, they will likely start contacting you, regardless of your contractual payment terms.

For instance, if you usually quickpay (1-2 days), factoring companies will expect this prompt payment consistently. Any delay, even if minor and within your agreed terms, can trigger persistent follow-ups.

Here's why this happens:

  • Factoring companies compile a list of invoices that are past the debtor’s average days to pay each month. This raises red flags for carrier factoring companies because any variance outside of average days to pay could be a sign of cash flow or liquidity issues.
  • If you appear on this list, you will be subjected to increased follow-up calls and emails.

In order to effectively manage this, it is important to make regular payments. One convenient way to achieve this is by partnering with a freight factoring company like Denim, which offers a days-to-pay feature. This feature automatically sends payments a specified number of days after the date of the invoice. By maintaining this consistency, the need for follow-up communications will be greatly reduced.

As carrier factoring companies typically have a large workforce, it is impractical to engage with their collections team. The best approach is to avoid getting on their list altogether, which can be accomplished by consistently making freight payments on time.

Step 3: Shift Payment to Net-30 Days, If Contractually Feasible

One strategic way to reduce calls is by shifting your payment terms to Net-30 days, if possible. This approach offers several benefits:

Flexibility

You have more time to manage cash flow and handle unexpected delays without immediate pressure from factoring companies.

Reduced Follow-ups

Factoring companies typically check outstanding payments on a monthly basis. With consistent net-30 terms, you are less likely to appear on their follow-up list. We recommend paying in 27-28 days to stay below net-30 business days.

A Better Score

Net-30 payment terms are often favorable in credit reporting with agencies like Ansonia, which can enhance your reputation and reduce hassle.

As you build up your average days to pay to 30 days, you will likely still receive calls. Remember, creating a new average takes making Net-30 payments consistently for multiple payments. It won’t happen overnight, but eventually you will notice less calls from carrier factors. 

What About Your Credit?

Delaying your payment to carrier factoring companies might seem like the opposite of what you want to do if you want to build credit, but in reality, delaying payment may actually improve your broker credit score. 

This is because some of the largest carrier factors don’t report payments to business credit bureaus like Ansonia if they are paid faster than 30 days. Some will only report open balances once a month. So if you are consistently paying down the balance as soon as it’s open, your volume will not be reported. A Net-30 day score is considered perfect with Ansonia.

Will Delaying Payment Impact My Carrier Relationships?

Carrier relationships your business. One of the main benefits of using a platform like Denim is to strengthen carrier relationships through transparency and quick payments.

In the steps outlined above, you are paying the carrier factor, not the carrier directly. Because of this, delaying payment and not quickpaying won’t have any impact on your carrier relationships because your carriers are still getting paid on time. 

Reduce Carrier Factoring Calls With Denim

By finding your average days to pay, understanding the expectations of factoring companies, and shifting to Net-30 payment terms when feasible, you can significantly decrease these interruptions and enhance your operational efficiency.

In addition, working with a freight broker tool like Denim can help alleviate some operational stress. Not only is our platform designed to help you build strong carrier relationships, but we often have relationships with carrier factoring companies so we can provide guidance on ideal average days to pay. 

We help brokers optimize their back office operations, including paying carriers, to grow their brokerage. If you’d like to learn more, request a quote today.

Download now
Guide | Profit & Loss Playbook

Guide | Profit & Loss Playbook

This free guide breaks down your P&L statement, shows key warning signs to watch, and shares simple strategies to improve cash flow and profitability.

Guide | 10 Niche Markets

Guide | 10 Niche Markets

This guide is designed for freight brokers like you who want to uncover new niche markets and grow their business.

Guide | Modernizing Freight Accounting

Guide | Modernizing Freight Accounting

Download our complete guide to streamline your accounting and gain better financial insights with batch entry.

Guide | Unmasking Double Brokers

Guide | Unmasking Double Brokers

Guide | Questions Brokers Should Ask Their Factoring Companies

Guide | Questions Brokers Should Ask Their Factoring Companies

Guide | How to Compete with 3PLS

Guide | How to Compete with 3PLS

Guide | 5 Additional Revenue Streams

Guide | 5 Additional Revenue Streams

Growing revenue without adding overhead is essential. This guide will help freight brokers uncover untapped opportunities for increased profitability.

Worksheet | Aging Invoice Tracker

Worksheet | Aging Invoice Tracker

Worksheet | Payments Tracker

Worksheet | Payments Tracker

Worksheet | Freight Market Sizing Worksheet

Worksheet | Freight Market Sizing Worksheet

Expand into a new industry with confidence. Run the numbers to determine profitability with our market sizing worksheet.

Template | Profit & Loss Statement

Template | Profit & Loss Statement

Get started on your Profit & Loss Statement with our free template.

Schedule a Demo

Schedule a Demo

Let's talk cash flow. Get started today!

Checklist | Holiday Preparedness

Checklist | Holiday Preparedness

Are you ready for peak season? This checklist helps freight brokers and carriers stay ahead of the holiday rush.

Guide | 8 Steps to Scale Your Brokerage

Guide | 8 Steps to Scale Your Brokerage

In 8 steps, you can scale your brokerage and grow your revenue! Download our guide now.

Guide | Evaluating Your Freight Tech Stack

Guide | Evaluating Your Freight Tech Stack

Do you know how many softwares your team uses? This guide will walk you through all the steps to audit and implement your freight technology stack stress-free.

Guide | How to Build Freight Broker Credit

Guide | How to Build Freight Broker Credit

Want better financing options? Learn how building credit can help you secure more funding and grow your business faster.

Boost Your Business Through Cold Calling

Boost Your Business Through Cold Calling

Implement these expert cold calling strategies and see your business opportunities multiply.

Guide | How to grow your freight brokerage

Guide | How to grow your freight brokerage

Begin with a growth mindset and harness these expert strategies to elevate your freight brokerage.

Guide | Freight Finance Planning Quickstart

Guide | Freight Finance Planning Quickstart

Growing your brokerage begins with a solid financial plan. This guide will show you how to write a financial plan that sets you up for success.

Checklist | Shipper Risk Information

Checklist | Shipper Risk Information

Don’t get blindsided by inadequate credit limits. Collaborate with your factoring company to accurately assess your shippers' risk using our essential checklist.

Guide | How to Stop Working Off Shipper Lists Guide

Guide | How to Stop Working Off Shipper Lists Guide

Template | Accessorial charges

Template | Accessorial charges

Ensure you and your carriers are always on the same page. Share this accessorial charges pricing sheet with your carriers before moving a load to avoid any surprises.

Scorecard | Factoring Company Switch

Scorecard | Factoring Company Switch

Is your factoring provider the right fit? Use our scorecard to see if it's time for a change.

Contact us to learn more and get detailed pricing.

Denim blue gradients
People looking at a projected computer screen in a board room meeting

By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. View our Privacy Policy for more information.