Why Regular Contract Audits Are Vital for Trucking Fleets
As freight markets shift and your carrier business matures, your financial contracts should evolve with you. Unfortunately, many fleet owners sign factoring agreements during their first hectic months of operation and never revisit the contract again. A thorough factoring audit reveals whether you are overpaying by hundreds—or even thousands—of dollars every single month.
The 7-Point Factoring Contract Checklist
When auditing your factoring relationship, inspect your monthly settlement statements and original agreement against these critical points:
- 1. Effective vs. Nominal Rate: Add all ancillary fees (wire fees, processing charges, invoice upload fees) to your base percentage to calculate your true effective rate.
- 2. Minimum Monthly Volume Covenants: Are you being charged shortfall fees if your gross invoice volume drops during seasonal freight slowdowns?
- 3. Escrow and Reserve Accounts: What percentage is held in reserve, how fast is it released, and does the factor pay interest on held funds?
- 4. Customer Discretionary Limits: Does the factoring company arbitrarily lower broker credit limits without warning, leaving you unable to factor steady customers?
- 5. Misdirected Payment Penalties: Are you charged heavy fines if a shipper accidentally mails a check to your office instead of the factor’s lockbox?
- 6. Termination Notice Period: Exactly how many days in advance must you notify the company to cancel without penalty?
- 7. UCC-1 Scope: Did the factor file a blanket lien on all your business assets, or solely on accounts receivable?
Real Carrier Case Study: $18,400 Annual Savings
A 4-truck carrier hauling Midwest dry van freight came to Trucker’s Choice paying what they thought was a 2.5% flat rate. After auditing their settlements, we discovered invoice fees, wire fees, and aging adjustments pushed their actual effective rate to 4.8%. Transitioning them to our transparent program saved them over $1,500 every month.
Request Your Free Contract Audit
Let Bryan Trull and the Trucker’s Choice team review your current factoring agreement line by line. Call (480) 993-4100 today—no obligations, just honest numbers.