How does Trucking/Freight Factoring Work

Posted in: Freight Factoring News- Jun 28, 2013 No Comments

Factoring for the truckload carrier is when one company buys or lends you money on your freight invoices. This means that you will be paid immediately for the freight you haul rather than waiting for the customer or freight broker to pay you. This is a great way to finance a start up company or grow your existing company. Factoring your receivables allows a transportation company access to immediate cash for invoices and enables it to start up or grow quickly.

Factoring companies are becoming very customer service oriented and are able to provide valuable time saving services. In addition to a great finance tool a good factoring company will become your partner and perform the role of Credit Department, Accounts Receivable, Accounts Payable and Collections. One thing to look for in a great partner is what will they do for you and how will they help you to succeed. One time saving example is invoicing. Once you submit an completed shipment to the factoring company you are essentially done. The factoring company will invoice the customer and follow up to collect the payment. In a no recourse factoring solution you will have already received your payment for the shipment and will not have to do anymore to collect your invoice. Even before you book the shipment you can call and check the credit of the shipper or broker and find out if they have the necessary credit or if you need to make sure and get an upfront payment from the particular shipper.

A factoring company should be your partner
your factoring company’s goal should be to help you succeed and outgrow the need to use a factoring company. You may still like using the factoring company for all the benefits and time saving services they provide but after a while when your business grows you will not need the immediate access to money anymore. The sign of a great factoring company is that they want you to reach this point and celebrate when as a business owner you have grown to the point where you no longer need their services.