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If you have ever worked with a legacy factoring company or used broker Quickpay, you have probably noticed that things can move slowly. The stated purpose of factoring companies and broker Quickpay is to improve your cash flow, but it still often takes days until you can actually use your money.
Outgo offers instant fund availability once an invoice is approved. That isn’t just a coincidence. There is one way to make money move instantly in freight, and that is by combining banking and factoring.
In this article we explain why legacy factoring and broker Quickpay is slow, and how Outgo’s approach makes it possible for you to access your money the instant an invoice is approved.
After reading this article you will understand:
- How legacy factoring companies and brokers move money and why it is slow.
- How Outgo combines banking and factoring for instant fund availability
1. How Legacy Factoring Companies and Brokers Move Money and Why it is Slow
A legacy factoring company stands between your customer (a broker or shipper) and you. When you submit documents to a factoring company the following steps take place:
Funding process for legacy factors and broker Quickpay
- Approval: A human being reviews the documents you submitted to decide if the invoice is approved for factoring/Quickpay. This can take up to a day.
- Fund transfer: If the invoice is approved, the factor/broker will send you funds. Typically they initiate an ACH transfer from their bank to yours, which takes 2-3 days. If you want the money faster, they will initiate a wire transfer which takes 1-2 days, and usually comes with a fee.
- Fund use: The money arrives in your bank account, but you will not receive any notification that this has happened. You may not receive any benefits when you use those funds.
Notice what happened here. First, the freight factor/broker used manual processes to decide if you were eligible. Second, they initiated a transfer between banks, which took 1-2 days.
In the U.S., ACH transfers do not happen on the weekend or on federal holidays. That means that if you submit an invoice on Thursday afternoon and it gets approved on a Friday afternoon you could be stuck waiting until Monday morning to get access to your funds.
2. How Outgo Combines Banking and Factoring for Instant Fund Availability
When you sign up with Outgo, you don’t just get a factoring solution, you also get a bank account through our partner bank. This is because combining factoring and banking is the only way to provide carriers with instant fund availability.
Because you have an account with Outgo’s partner bank, you do not need to wait for money to move between banks as you would using a legacy factor or broker Quickpay. Once an invoice is approved, funds are there for you to use, instantly. This can shave up to 3 days off of the time to get your money.
To illustrate, let’s revisit the steps from invoicing to fund availability with Outgo:
Funding process with Outgo
- Approval: Outgo uses technology to review invoices, reducing the time for human review. Most invoices are approved for factoring within seconds.
- Fund transfer: The instant an invoice is approved, your Spending Power is increased.
- Fund use: You can transfer funds, withdraw from an ATM or spend directly from your Outgo Card. When you use the Outgo Card for purchases, you can reduce your factoring rate by as much as 1.5%
To summarize, the speed to access your funds depends on how long it takes your factoring company or broker to review invoices and the methods in which they make your funds available. Faster funds are possible when there are fewer manual reviews and when there is a direct link between factoring and your bank account.
Want to get to your money faster? Reach out at interest@outgo.co.