Trucking companies are responsible for a big chunk of the economy. They are the ones that are driving it. Freight factoring companies are the next big thing. They step in and assist both carriers and brokers in shipments.

Freight Factoring:

A company buys invoices from a shipper within 24 hours and charges a small percentage. The factor has the responsibility to collect the unpaid invoices from the brokers. Once they’re all collected, you get the rest of the contracted amount paid to you.

Benefits Of Freight Factoring:

Trucking companies move loads across the country daily. They deliver loads and sometimes wait for payments as long as 90 days. At the same time, you need cash flow to manage your weekly expenses. These expenses include fuel costs, the employee pays, maintenance costs, insurance, etc. This is where a freight factoring company steps in. They will provide you with immediate cash. So, you won’t have to wait for payments.

Expand Company Operations:

It helps you expand your operations, hire more drivers and minimize risks within the company.  

You can enjoy the relief of letting the factoring company handle all the billing and collections while you get money upfront.

Payment Within 24 Hours:

The average period for brokers and shippers to pay their carriers is 30-45 days. About 60% of these payments are still made late. So, when you submit an invoice to a factoring company, you receive the payment within 24 hours. It is then the factoring company’s headache to collect the invoice from the shipper.

Free Credit Checks:

Freight factoring is based on the firm’s credit the freight company is hauling for. So, the factoring company is, in a way, running your customer’s credit for you. This helps logistics companies to know their customers better, reduce their costs and get a sense of security.

It also gives suppliers and vendors a sense of security in the freight companies.

No Set Limits:

Banks’ lines have limits, but factoring lines are flexible. As long as you work with credible brokers and shippers, you’ll continue to get credit. Using freight factoring, small businesses can expand their operations quickly.

FAQs

Q- Is a factoring company profitable?

Factoring companies are very profitable. For example, you have invested $20,000 in invoices, and you can generate up to $ 80,000 in profits by factoring. 

Q- What is freight broker factoring?

Freight brokers use factoring companies to pay their carriers and cover their business costs. They don’t have to wait 90 days for their official payments. It is a process where a factoring company buys your unpaid invoices and refunds you up to 98% of the cash the same day. 

Conclusion:

Freight factoring is an important consideration for smaller businesses. They are used by larger firms too but less often. Freight factoring companies are a great way for logistics and transportation companies to manage their expenses.

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