Receivables factoring in the freight and trucking industry
Trucking companies all across the nation depend on freight factoring to run and operate their businesses. Freight factoring stabilizes your cash flow by giving you immediate cash for your freight bills upon load delivery. You don’t have to wait 30 to 60 days for your customers to pay, which enables you to handle more deliveries.
Freight bill factoring provides a complete financing alternative to negotiating with every single freight broker for which you deliver goods. Freight factoring companies handle all your invoices, no matter how many brokers you have. This is especially important for trucking companies that work with a large number of freight brokers such as C.H. Robinson, TQL, or XPO Logistics.
If you operate a trucking company, and your shipping customers and freight brokers have good credit but are slow paying their freight bills then you should consider hiring one of the top freight factoring companies to help you. Not only do you get cash advances, but you often receive other benefits such as fuel cards (e.g. Comdata, WEX Fleet One); fuel discounts; tire and maintenance discount programs, and free freight-matching load boards versus paying for loads on boards like DAT or Truckstop.com.
Back office support
Truck factoring companies advance you cash to keep your trucks on the road, but they also do much more. Trucking factoring companies typically provide back office functions such as credit checks on brokers and shippers; invoice generation and submission; receivables processing and accounting; as well as professional collections. These services are extremely helpful to any trucker, whether your a single owner-operator or a large carrier.
Trucking advance rates
Trucking companies enjoy the best advance rates in the factoring industry. Other types of businesses such as staffing or construction often carry advance rates of 85% or less, but trucking cash advance rates are often 95% or more. Some freight factoring companies will fully-fund your freight bills, advancing the entire invoice amount less factoring fees.
Recourse vs non-recourse
Some freight factoring companies offer you a choice between recourse and non-recourse factoring. Recourse factoring protects you from non-payments due to customers credit issues. Non-recourse factoring holds your factoring company liable for any bad debts, but it’s usually more expensive. Recourse and non-recourse factoring pertain only to non-payments resulting from credit issues such as insolvency or bankruptcy. You’re still liable for disputed claims, non-delivered goods or incorrect billing.
How freight factoring works
- Complete the delivery of goods to your customer and send your freight bill (or BOL) to your freight factoring company.
- The freight factoring company purchases your freight bills and sends you cash for up to 100% of the invoice within 24 to 48 hours.
- The freight factoring company collects payment from your customers and sends you any reserve as final payment.