Chargebacks in The Factoring Process
After exploring the different factoring programs OTR offers, you may find yourself thinking recourse factoring is the best option for your business. While recourse factoring comes with additional responsibilities for the carrier, it’s often the best option for medium to large sized fleets, and can open the door for further growth.
There are several differences between our non-recourse and recourse programs, but we are going to focus on two of the major differences. On recourse you’ll be able to factor invoices for more brokers or shippers, but you are taking on the risk of chargebacks for unpaid invoices. We work with thousands of different brokers and shippers, but like all factoring corporations, we do have a no buy list of companies we don’t work with because they haven’t met our approval standards. On the recourse program, we will work with most customers from our no buy list. During the factoring process we don’t want to limit who you can factor, but this could make you subject to chargebacks for unpaid invoices after a specific time.
You might be wondering why anyone would run with no-buy brokers or shippers and take on a risk of a chargeback. Just because OTR could not approve a broker for everyone, doesn’t mean they’re a bad company, they just did not meet our approval criteria for non-recourse customers.
If all no-buy customers aren’t that bad, why would there be chargebacks?
Chargebacks can occur for various reasons, but OTR does everything in our power to help avoid them. Sometimes chargebacks happen because of paperwork issues that were never resolved, like rejected paperwork for illegible bills or missing bills. Maybe there was a claim on a load and the broker put your account on a short-term hold. We all know how long it can take for a claim to be resolved! Other times the broker pays very slow or even shuts down their business and while we have solutions for these issues, it can often take an extended period of time to resolve. Chargebacks don’t mean you won’t see that money again and if the invoice pays at a later date, we will always get you refunded. Chargebacks shouldn’t occur often for anyone, but it does eventually happen. What’s important is that you have a factoring company who can help you avoid these issues and has your back when it happens.
What’s the OTR Advantage? How Does OTR Help You Avoid Chargebacks or Significantly Reduce the Chargebacks You Saw With Your Previous Factor?
If you don’t have chargebacks with your current factor, or you do direct billing and don’t have issues collecting full payments on time, you should NOT start seeing chargebacks with OTR. We’re always working to help you reduce chargebacks, not increase them. Keep doing what’s been working for you and nothing will change with us. If you are having issues collecting, whether that’s with a factor or through direct billing, OTR can help you mitigate this issue. We’re confident in our ability to solve your cash flow needs and keep those funds in your pocket. Here are some of the ways we do it – We have a dedicated A/R (Accounts Receivable) team, complete transparency through our portal, consistent communication, and a dedicated team for each client.
A+ Collections Team
Our team has mastered the collections process and although you’re on recourse, they still assist you with collecting payments. They’re one of the best A/R teams in the business; They know the industry, they know the brokers and they know how to bring in the payments!
We find transparency is incredibly important when you’re on a recourse program – How can you make sure you’re avoiding chargebacks if we don’t help keep you in the loop? You can see everything in our portal! You’ll have full access to your aging so you can track invoices, see paperwork issues that need to be fixed and ensure payments are coming in.
We have a weekly alert system to let you know of any issue that is preventing payment. You’ll be able to see the work of our A/R team, communicate with them through the portal, generate reports, track transactions, and see pay status. We find it’s important we work together to keep your account running smoothly and it goes a long way when we need to tackle an issue.
The OTR Team Is Dedicated To You!
The most effective way we can help you avoid chargebacks is by assigning you a dedicated team that will be with you every step of the way. Do you have a broker offering you amazing rates, but you aren’t sure how risky it is to run a load for them? Give your team a call and they can help you evaluate the risk, they can tell you if they’re in good credit standing, average days to pay, or if they have specific invoicing requirements. Your team will have an excellent understanding of what could be an issue to collect on and what is needed to ensure a timely payment. They will communicate with you every step of the way to ensure your receivables are protected.
Chargeback can be an unsettling word and no one is happy when it happens. OTR understands this concern and that’s why we focus on making this a non-issue for our clients. We don’t want to ignore this reality of factoring. We won’t pretend chargebacks don’t exist, but the difference with OTR is that we care about finding a solution and avoiding the primary causes.