Factoring
Factoring is the go-to solution for many trucking companies, big and small alike, to not only provide immediate cash flow but also back office support for an operating company.
Factoring for trucking companies is all about cash flow. Cash flow keeps a transportation company in business. Freight factoring is about having ready funds for fuel, payroll, repairs, and more. It’s an easy way to manage cash flow for your trucking company. Factoring company buys invoices for freight that you’ve already delivered, so it’s money that is advanced on accounts receivable. Freight factoring keeps the cash flowing so you can keep hauling.
The average days for brokers and shippers to pay the carrier is somewhere between 30-45 days, about 70% of invoices are paid late. When you submit your invoice to the factoring company, you get your payment the same day or next day. The factoring company is then responsible for collecting on the invoice, even if it pays late. So, factoring your invoices for fast payment can be a good way to avoid delayed payments.
What is needed for a factoring company?
If you want funding from a factoring company, you are going to need a business bank account. Factoring companies do not give out cash and do not transfer to personal bank accounts. Invoice factoring requires their clients to have a business-only account where they can send their wire or ACH transfers.
Do you have to use a factoring company?
Sometimes companies use factoring simply to keep the business moving forward. If waiting on an invoice is putting your payroll at risk, it may be worth it to use a factoring company to ensure you can pay your employees, using the money from the factoring company as a stopgap measure.
What Happens After the Factoring Company Gets Paid?
Once the factoring company pays you on the load, it is their responsibility to collect on the payments. Once they collect the payment from your customer, the invoice is marked closed.
How Does Factoring Work?
After delivering a load, you submit the Rate Confirmation & BOL to your factoring company. The factoring company verifies a clean delivery with the brokerage. Once verified, the payments are deposited into your account via ACH (overnight), wire transfer (under an hour), or through your fuel card (instant). Many factoring companies make invoicing even easier by providing an online portal where you create the invoice and submit both the bill of lading and rate confirmation.
want to know more?
Willing to get to know more about Factoring ? Contact our expert, and get a full consultation to get answers to your questions! Just choose the best approach for you.
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Watch video below to get more info on Factoring
We suggest you watch the video. Where you will be told in more detail about factoring. The video will help you understand how it works and why you need it.
