Using Smart Factoring to Pay Less on Every Invoice

Smart Factoring was invented by Outgo as a way to help carriers take better control of their finances and save money. It means that you have the power to pay even less than your main factoring rate. 

This is totally new to the freight factoring industry, where the norm is for companies to sneak in ways to increase your rate.

It’s worth diving into the specifics of how Smart Factoring works, and how it is different from the way other freight factoring companies (and broker Quickpay!) operates. 

In this article we’ll answer the following:

  1. What is Smart Factoring?
  2. Why does Smart Factoring save you money?
  3. How much could Smart Factoring save me on an invoice?
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1. What is Smart Factoring?

Smart Factoring is a unique offering from Outgo that gives you the power to factor “on-demand”. Here is how it works:

  1. When you upload an invoice and it is approved, that invoice is added to your Factorable Balance. It is important to note that the invoice is not factored at this time. You have the option, but not the obligation, to factor those amounts once they are added to your Factorable Balance.
  2. When you need to access funds quickly, you can factor exactly what you need out of your factorable balance, and pay your Factoring Rate. For a medium-sized carrier, this may be around 2%. 
  3. But, if you wait 30 days to factor, you pay just 1%.
  4. And, if you spend out of your Factorable Balance using the Outgo Card for purchases, you pay just 1% for factoring. 

Here’s the key insight: you don’t need to factor everything all at once at your highest rate. There are two ways to save. You can use the Outgo Card or wait to factor at just 1%.
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2. Why does Smart Factoring Save You Money 

To truly understand why Smart Factoring can save you so much money, it is helpful to compare to standard freight industry practice among factoring companies and brokers.

When you factor with another company or use broker Quickpay, you are agreeing to sell 100% of that invoice, at your factoring rate. 

Let’s say you have a $2,000 invoice but only need to access $500 immediately. Other factoring companies and brokers don’t care: you’re going to pay your factoring rate on the entire thing. Notice how with Outgo, you could have factored only the $500 you needed, and then paid only 1% on the rest of that invoice.

Furthermore, the funds from another factoring company or a broker may take days to arrive, even though you paid for them already. To learn more about how Outgo makes funds access instant, check out Faster Funds: The Magic of Combining Banking and Factoring
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3. How much could Smart Factoring save me on an invoice?

Let’s do a comparison of how much you pay with Smart Factoring versus with a broker QuickPay offering. For this example, let’s use an Outgo Factoring Rate of 2% and another factoring company offering a 2% Factoring Rate. Keep in mind, other factoring companies may have hidden fees, so take a look at How to Calculate Your Cost of Freight Factoring.

Let’s imagine that you completed a load worth $2,000. You need to withdraw $250 in cash for operating expenses, send $1,000 to a driver through an App connected to your Outgo Card, and the rest you can wait to factor. Your final costs would be:

Just like that, by using Smart Factoring your actual rate on an invoice drops to 1.13% compared to 2% with another factoring company. That is the power of Smart Factoring.

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Want to start Smart Factoring today? Reach out at interest@outgo.co.

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