When you choose factoring to boost cash flow and keep your trucks rolling, typically factoring companies offer four types of factoring to choose from. Flat fee non-recourse factoring Flat fee recourse factoring Non-recourse factoring Recourse factoring All forms of factoring are easier to obtain than a bank loan because they're based on the creditworthiness of your customersÉnot on your trucking company's credit score or financial history. Deciding what's best for your US trucking and transportation business depends on how you feel about three key aspects: Risk: How much risk you're prepared to absorb. Fee structure: How stable and predictable you want your fee structure to be. Cost/benefit: The related factoring cost weighed against the value you receive from each product. Flat fee non-recourse factoring Flat fee non-recourse factoring, as a financing solution for your US trucking company, is the simplest of the four solutions to manage and carries the least risk. Fees are a guaranteed flat rate, ALL IN, calculated upfront, regardless of how long it takes a customer to pay their invoice. The factoring company assumes the risk if your customer doesn't payÉvirtually eliminating the possibility of bad debt. Fees for non-recourse factoring are higher than recourse factoring because the factoring company assumes all risk. Flat fee recourse factoring When you choose flat fee recourse factoring for your US freight business, you retain the simplified flat fee structure, but increase the potential risk. Fees are a guaranteed flat rate, ALL IN, calculated upfront. If your customer defaults on payment of their invoice after a specified term, you're on the hook for the amounts outstanding. Fees for recourse factoring are lower than non-recourse because you assume the risk. Non-recourse factoring Non-recourse factoring for your transportation business retains the least risk, but comes with a variable cost. Fees are based on a daily interest percentage that's set at the time of the transaction. Once your customer pays their invoice, fees are calculated. Typically, they are based on a small administration fee plus a financing fee that's: the number of days outstanding X the daily interest rate X the invoice amount. The factoring company takes on the risk if your customer defaults on paymentÉwhich removes bad debt. Fees for non-recourse are higher than recourse factoring because the factoring company assumes the risk. Recourse factoring Recourse factoring carries the lowest potential factoring cost of all forms of factoring because fees are directly linked to how long it takes a customer to pay their invoice. This low rate begins to escalate the longer your customer takes to payÉand you retain the risk if they default on payment. As with non-recourse factoring above, fees are calculated once the full transaction is completed. They are variable, based on the period of time it takes a customer to pay. If your customer doesn't pay their invoice after a specified term, you assume the risk for amounts outstanding. If you're struggling with balancing the costs of the various types of factoring against the benefits each brings, a reputable factoring company like Accutrac Capital can help you better understand which option is better for your US trucking business's unique circumstances. For more information about factoring to provide cash flow to keep your trucks on the road, visit www.accutraccapital.com.