Grow Your Transportation Company with Freight Factoring

Freight Bill Factoring

One of the biggest challenges for a growing transportation company - freight carrier or brokerage - is running out of money. It's not that the company is doing badly. Actually, the opposite is true. You are delivering loads and have good clients. The problem is that most clients pay their invoices in 30 to 60 days rather than offering quick pays. And if you don't have a cash reserve to handle this, you will soon have all your money tied in slow paying invoices. You'll start to juggle and delay critical payments, like drivers, fuel and repairs. Maybe you'll miss some payments. Before long, you have serious financial problems and you stop growing.

A different way

One way to fix this problem is to finance your transportation receivables. This improves your cash flow by accelerating the money the is tied in slow paying invoices. Your trucking company or brokerage receives immediate funds, which can be deployed to cover company expenses. More importantly, you can start offering payment terms to shippers who do not offer quick pays - without worrying about slow payments. This is because you can always finance your freight bills if you need money.

How does it work?

The program is relatively simple and is handled by a factoring finance company. They provide the funding, handle the transaction details and settle once your customer pays. Most truck factors finance your invoices by paying you in two installments. The first installment is called the advance and is paid as soon as the load is delivered and accepted. The second installment is called the rebate and is paid once your client pays in full. The advance rate varies, but it's usually about 90% of your invoice. Here is how a transaction is structured:

  1. You deliver the load
  2. You send the documents to the factor for financing
  3. You get 90% of the invoice (this varies) wired to your account
  4. After 30 to 60 days, your client pays
  5. You get the remaining 10% (less fees) as a rebate

One important detail

You should note that freight factoring only works if your customers have good credit, but pay slowly. It will not work if they have no commercial credit or if they have collections problems. Actually, the most important requirement to qualify for this type of funding is to have commercial shippers with good credit. Aside from that, your company should have a current authority, insurance should be in place, and it should not have major tax or legal problems.

The line has no limit

Perhaps the biggest advantage of this solution over other business financing programs is that the line has no defined maximum limit. The limit is based on your invoices to qualified customers. The line is designed to grow, and adapt, to your sales. This makes it an ideal solution for trucking companies that have great opportunities but are running into cash flow problems due to slow paying shippers.

Factoring rates as low as 1.50%. Click here for a quote!

Call (866) 730 1922 to speak to a rep. USA and Canada.

Next: Freight bill factoring for Canadian trucking companies

Previous: Financing your trucking company with freight bill factoring