Non Recourse Factoring Helps Truckers

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Non recourse factoring benefits Riviera Finance trucking clients when freight broker Network F.O.B. announces in an email that they are going out of business.  For many other truckers, this is bad news because it leaves then with unpaid freight bills.

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Unfortunately, this burden of unpaid freight bills is not removed from a trucker if they have decided to sell their invoices to a recourse factor. The carrier will still be responsible and probably have to buy back the invoices in 90 days. This can be of great concern to the small trucker, because it might not be affordable to them.

There are options to try and collect on unpaid freight bills. A trucker can file on the $75,000.00 surety bond, but this will be quickly depleted. Another option is for the trucker to make a claim to the shipper for payment as the carrier of record, but this is a challenging process. An attorney? Costly. A collection agency? Expensive. A write-off? Likely.

There is another choice to eliminating your credit risk for unpaid freight bills and that is by choosing a non recourse factor. By selecting a non recourse factor they assume the credit risk upon purchase of the invoice. The carrier then obtains immediate cash flow on the invoice and also eliminates credit risk.

Trucking companies choose not to go to a non-recourse factoring because it is considered more expensive. This become a calculated decision for them, depending upon their tolerance of risk and their resources to collect invoices.

Riviera Finance has 34 carriers with varying outstanding balances with Network F.O.B. and they will benefit from Riviera Finance’s non recourse factoring program. Now, our skilled staff will roll up their sleeves and by various means begin collecting on these unpaid freight bills.

Riviera Finance has been in business since 1969 and provides full service factoring on a non-recourse basis. We always have a vested interest in the credit decision and collection of an invoice.

Riviera Finance Clients Benefit from Non-Recourse Factoring

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Several transportation clients have benefited from Riviera Finance’s non-recourse factoring programming when the transportation brokers, Great Bear Transport, Quebec, Inc, and Tropical Logistics went out of business. The transfer of credit risk was assumed by Riviera when invoices were purchased from the carriers on a non-recourse basis. Riviera then assumed the credit loss.

Often times the value of non-recourse factoring is seen as less important when given a choice of a lower rate on a recourse basis. In some instances that argument may be valid, but such a choice requires a business to analyze the credit risk and evaluate the customer’s credit worthiness beyond just making an assumption.  As well, it may be realized that non-recourse factoring is only nominally more expensive, if at all, and having what amounts to insurance coverage can provide more than just peace of mind.

imageWith Riviera Finance’s non-recourse factoring program, credit management is not taken for granted, but considered a major component of service. A Riviera Finance client will find unparalleled support in the credit management provided to them, including credit evaluation on the customer, automated credit decisions through Fastcredit, invoice collection, and assumption of credit risk. These are very tangible benefits of Riviera Finance’s non-recourse factoring program that demonstrate a vested interest in the accounts purchased and also a deep rooted understanding on how difficult it is for a small business to absorb a credit loss.

Ohio Oil and Gas Association Meets in Columbus

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Last week’s Ohio Oil and Gas Association Annual Winter Meeting in Columbus, Ohio was well attended. Here, Jason Smith of Riviera Finance is attending the booth and discussing how factoring can play a role for contractors servicing the energy producers. 

What was realized from Riviera Finance attending the trade show is that there is a growing demand for contractor services by the energy companies as they increase production. While this is good news for the industry, many contractors are having a tough time with cash flow to run their business when waiting for payment from the energy producers.

Riviera Finance believes it can provide a solution to the contractors servicing the energy producers by factoring their accounts on a non recourse basis. Factoring accounts can increase the cash flow to the contractor allowing them to meet the increased demands of the energy producers.

Credit and Credibility

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imageA common misconception is that non-recourse invoice factoring companies don’t really care about their clients’ credit.  The logic goes like this:

  1. The client’s customer is the one paying the bill.
  2. The factoring advance is given only after the product has been delivered.
  3. The client poses no risk, and therefore no credit issue.

The truth of the matter is that the non-recourse factor relies heavily on the client’s credibility.  As with any relationship, as time goes on, trust either builds or erodes.  The factor either gains confidence in the integrity of the client and the business transactions, or becomes increasingly skeptical.  In the context of factoring, clients manifest integrity in a variety of ways, such as:

  • accurate invoicing
  • accurate and complete order fulfillment
  • proper and organized backup paperwork
  • timely reporting of financial changes
  • reporting of underlying client issues

When the factor comes to fully trust the client’s integrity, it’s assumed that the face value of each “next transaction” presented for factoring can be relied on to reflect its actual value.  This is the key to a smooth factoring relationship, which in turn can mean higher advances, fewer delays, and an open path to maximum cash flow.

Learn more about non-recourse factoring here.