Freight factoring is the ability for trucking companies and owner-operators to get payment for delivery of a load within a short amount of time, usually 24 hours. This also makes payment no longer an issue as the companies get paid even if the shipper doesn’t pay on time.
This is the perfect way to not only get paid quickly for each and every load that you and your company haul, but to get that payment quickly. Quicker payment allows for purchases to happen faster and easier, like gas purchases and break down repairs.
It is very simple to use and makes everything much more streamlined for not only the driver but the company as well.
Haul the load as usual
Submit the invoice to the factoring company for payment
Get the funds for the load delivered immediately
Factoring company deals with the collection from the shipper and all invoicing to customers
You get the next load to its destination faster
Listen, factoring companies know that you don’t have the time to wait around to get paid for the loads that you deliver. Waiting 30 days or more for payment can make some companies, especially smaller ones and owner/operators go bankrupt in a matter of months. They take the invoicing and billing aspect off your busy hands and keep your business moving. Having this service available to you allows for your billing to be handled in a timely and efficient manner. Things like payroll, fuel cards to be paid, advances to your operators, repair costs to be managed and new equipment to be purchased can all be a worry of the past.
This isn’t a loan program either. Factoring companies purchase the companies or truckers invoices at a discounted rate and in turn, funds the trucker for the invoice upon delivery. This is also the perfect solution for small companies that don’t qualify for traditional commercial loans either due to lack of financial history, poor credit or no credit. Factoring makes it easy to get the capital needed to get the next load without having to jump through all the banking hoops and hassles. Factoring of freight bills could not be more simple.
Clients you service will also appreciate the lead way of freight factoring as they get slightly longer to pay the invoices than they would if they needed to pay with you directly.
There are however, things to consider when choosing a factoring company. Things like how fast can they approve you or your company, can they give funding with copies like faxes or scans instead of originals, how fast can the funding be available, is there support and how easy is it to get in touch with, and is their approval of you based on you or your clients credit worthiness? These are just some basic questions to get answers to when making that choice that should make everything easier. Recourse versus non-recourse questions are also a huge consideration. If the invoice isn’t paid will they come to you (recourse) or your client (non-recourse) for payment? Some companies can’t take the financial strain if the client doesn’t pay their bill in a timely manner and this option saves them from just such an event.