Factoring is supposed to make running a trucking business easier. For a fee, carriers sell their accounts receivable to a freight factoring company so they can get paid faster and keep hauling. Their factoring company should be a partner with a vested interest in helping them succeed.
But what happens when carriers aren’t satisfied with their truck factoring companies? What happens when communication breaks down or when the invoice factoring process runs into frequent logistical snags? What happens when carriers want to switch factoring companies?
At Apex Capital, America’s Favorite Factor, we are experts at helping trucking companies switch factors. For 30 years we’ve guided many carriers through that process to welcome them into the Apex family.
Common Pain Points and Recurring Issues That Lead to Switching Factoring Companies
The need to switch factoring companies often arises from a variety of common pain points and recurring issues trucking companies encounter, all of which make running their business more challenging. These recurring pain points often drive companies to explore new partnerships with other factoring companies that better address their financial and operational requirements.
Delays in Funding
A prevalent issue since slow processing times hinder cash flow management and impede operational efficiency.
High Fees and Hidden Charges
Another significant concern because fees eat into profits and diminish the benefits of factoring.
Poor Customer Support and Communication
Carriers feel frustrated and uncertain when they can’t get answers to questions or help with resolving disputes.
No Non-Recourse Protection
Not all trucking factoring companies offer non-recourse factoring. Without it, carriers may be responsible for losses if an approved customer becomes insolvent or declares bankruptcy. Non-recourse factoring provides an added layer of protection that helps reduce credit-related losses.
Limited Customer Credit Approval
If your factoring company won't extend enough credit to your customers – or won’t approve them at all – it can prevent you from hauling loads for your preferred shippers and brokers. A factor should support your growth, not limit your opportunities.
The Apex Way
Expert insight from
Brett Schroeder
Chief Sales Officer
“
Throughout the years, we have successfully helped numerous truckers transition their accounts to Apex. We hear these common complaints regularly, so we offer Apex advantages that allow carriers to run their business with all the confidence and consistency they deserve.
”Why Trucking Companies Switch to Apex:
Competitive Rates
Transparent pricing and funding solutions.
Same-Day &
Next-Day Funding
Get the money you need fast to keep your business moving.
24/7 Factoring
Nights, weekends, and bank holidays—we’re here when you need us most.
Recourse &
Non-Recourse Factoring Plans
Flexible options that help protect your business and cash flow.
Credit Lines
for Fuel
Access fuel when you need it with competitive rates and quick approvals.
Cash Flow
Assistance Program
Resources and support to help you manage cash flow and grow your business.
“We have no monthly minimum fee requirements, no long-term contracts, a dedicated credit and collection team, experienced account executives, an online Account Management Portal (AMP), and a free mobile app for instant access to information,” says Schroeder.
“All of this sets us apart from the competition, including accurate and timely funding through an ACH direct deposit, bank wire, or our instant blynk® funding payment system.”
How Do You Leave Your Current Factoring Company?
So, you’ve made the decision to leave your current factoring company. The first thing to do is take note of when your factoring contract is up for renewal, as that date will dictate your next few courses of action. Then, it’s time to give notice that you are leaving. Keep these important things in mind.
Giving Notice
The standard rule is to formally notify your current factoring company 30-60 days before your contract’s renewal date.
You’ll need to find out if you can deliver your notice via email, or does it need to be mailed as a paper copy.
Termination Clause and Fees
Switching from one factoring company to another means that your new factoring company will buy your open invoices from your old factoring company. This process is called a buyout.
How does a buyout work? The new factoring company will pay the old factoring company whatever funds have already been advanced plus any fees that have been accrued. Familiarize yourself with these fees.
The Cost of Switching Factoring Companies
Switching from one factoring company to another means that your new factoring company will buy your open invoices from your old factoring company. This process is called a buyout. How does a buyout work? The new factoring company will pay the old factoring company whatever funds have already been advanced plus any fees that have been accrued. Familiarize yourself with these fees.
- Early termination fee – If you exit your factoring contract early, a termination fee could be added to your buyout contract terms.
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- For example, if a carrier has $50,000 in open invoices, an advance rate of 90 percent, and a factoring fee of 3%, the buyout amount will be $46,500. If the carrier is moving over to Apex, then Apex will wire the former factor $46,500 and will then instruct your customers to pay Apex. Be aware that your former factor may charge an extra fee on top of the open invoices and factoring fees.
- Buyout fee – The new factor may charge a buyout fee for the process of moving invoices over from the former factoring company. Typically, these buyout fees are 1-2% of the total invoices that the new factoring company bought from the old factoring company.
The Apex Way
Expert insight from
Jaime Medina
Bilingual Sales Development Manager
“
Transitioning from one factor to another can seem confusing and challenging. That's why Apex focuses on clearly identifying the steps needed to make the transition.
”How Apex simplifies the transition process:
Clear communication from the start
Step-by-step guidance
Ongoing support throughout the transition
Transparent buyout fees
Defined expectations and timelines
“We want to avoid confusion and eliminate roadblocks, so the process flows smoothly.”
What About Funding During the Buyout Process?
Planning ahead is one of the best ways to ensure a smooth transition from one factoring company to another. Because trucking companies rely on consistent cash flow, it’s natural to have questions about how funding works during a buyout. Understanding what to expect – and how Apex helps guide the process – can make the transition much easier.
Will there be a temporary pause in funding?
Yes, there may be a brief pause in funding during the verification and transition process. During this time, neither factoring company can purchase new invoices until the buyout is finalized. In many cases, the process is completed within a day or two. Delays can happen in the event of complex transitions or delays in communication. Apex works closely with all parties to complete the process as quickly and efficiently as possible.
What is the carrier’s role in the buyout?
For most carriers, the transition requires very little involvement. Much of the communication takes place between the current factoring company and Apex. Occasionally, a carrier may be asked to assist if additional documentation is needed or if a customer cannot be reached to verify a completed load.
What happens if a payment is sent to the former factor?
If a customer accidentally sends payment to your previous factoring company after the transition has begun, there is no need to panic. By law, the previous factoring company is required to forward those payments to the new factoring company as part of the transition process.
For carriers, the biggest challenge is often not the buyout itself. It’s knowing what to expect while the transition is taking place.
“Before the buyout process begins, Apex explains the timeline and helps carriers prepare for what to expect,” explains Medina. “Once the verification process starts, invoices can no longer be submitted to the current factoring company, and Apex cannot fund new invoices until the transition is complete.”
How carriers can prepare for a buyout:
- Understand that buyouts can take one or two days, or up to a week
- Plan to maintain a reasonable working capital cushion
- Stay in communication throughout the process
- Be prepared to provide extra documentation if needed
“As a general guideline, a carrier factoring approximately $40,000 in monthly receivables may benefit from having around $10,000 in available working capital during the transition,” Medina says. “Our goal is to help you make the transition as seamless as possible. We coordinate with your current factoring company and keep you informed, so you can stay focused on running your business.”
What Is the Buyout Process?
After the new factor initiates contact with the old factor to formally begin the buyout process and a buyout date has been set, it’s time to take five crucial steps to ensure a smooth transfer of both responsibilities and financial arrangements.
The Buyout Process in 5 Steps:
Aging Report Verification – An aging report evaluates open invoices, outstanding payments, and pending transactions. This report helps identify unpaid invoices, making it easy to close them out.
Signing of New Factoring Agreement – Once the buyout details are finalized, the former factor, the carrier, and the new factor sign a new factoring agreement that outlines the terms and conditions of the financial arrangement between the carrier and the new factoring company.
Transfer of Buyout Amount – The predetermined buyout amount is transferred from the new factor to the former factor. This transaction signals the settlement of outstanding obligations and serves as compensation for the transfer of factoring services from one company to another.
Termination of UCC Filing – The new factor terminates the Uniform Commercial Code (UCC) filing previously initiated by the old factor. This ensures the removal of any liens or claims against the business’s assets and facilitates a clean transition to the new factoring arrangement.
Obtaining Release Letter and NOA – The carrier’s new factoring company gets a letter of release from the old factoring company that terminates their financial relationship and releases any claims or interests. The new factor then issues a Notice of Assignment (NOA) to all brokers and shippers of the new factoring arrangements for existing and future invoices.
The Apex Way
Expert insight from
Kasey Merck
Sales Development Manager
“
Having access and control of your aging report is essential for any company to be successful in our industry, whether you are switching factoring companies or not. If your current factoring company doesn’t give you access to a comprehensive aging report through an online portal or automated email, they are limiting information that should be provided to you. If the current factoring company values your business, it would be worth inquiring how you could receive a PDF aging report.
”Why Is an Aging Report So Important?
An aging report helps carriers:
- Monitor the health of open invoices
- Track outstanding payments
- See who invoices are billed to
- Identify unpaid invoices and their age
- Better manage cash flow
- Make informed business decisions
“Analyzing your aging report weekly is good business practice.”
What Is the Role of the Aging Report for Your New Factoring Company?
“Once you’ve decided to switch factoring companies, the aging report plays an important role in facilitating the transition,” continues Merck. “It’s crucial to save copies of invoices submitted for funding, especially within a 90-day window of switching. When the transition date arrives, all invoices and supporting documentation should align 100% with your aging report. Staying organized and maintaining accurate records helps ensure a seamless and stress-free transition.”
Why Choose Apex Capital for Factoring?
At Apex, we treat our clients like human beings, not numbers. That means we customize our services to your trucking company’s needs. There is no one size fits all mentality here. We offer recourse and non-recourse factoring options, 24/7 Factoring during nights, weekends, and bank holidays, online account management access, back-office support, a free mobile app, discount fuel cards, free credit checks on brokers and shippers, and more.
Apex Core Values – We believe in doing the right thing, which guides our strong work ethic. We take care of our clients, our business partners, and each other. We try to make a difference in the lives of our hard-working clients.
Apex World-Class Customer Service – Our customer service is our calling card. We want to be treated fairly, so we make sure and treat our clients fairly. We strive for five-star excellence and have the customer reviews to prove it.
Apex’s Dedicated Account Executives – Each one of our clients has a dedicated, highly experienced account executive who knows them by name and helps manage their accounts with kindness and expertise.
Apex as a Business Partner – The success of your trucking company is important to us just as it is important to you. Why? Because your success is our success. So, we always want our clients to consider us as part of a business relationship, as a partner.
Ready to Make the Switch?
Do you have any questions about switching factoring companies? Are you ready to talk with one of our sales experts about switching factoring companies? We are happy to provide a consultation and any guidance you might need. Click the link below to connect or call 855-211-0927
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