Freight Factoring Tips To Help You Build Your Trucking Business
Experts in the financial industry understand that freight factoring is a mainstream way to speed up cash flow in a fickle industry. The benefits to this type of factoring are numerous, from upfront funding to billing support services as well as other back office assistance. Take the time to consider the following tips, and you'll be on your way to making an intelligent, informed choice about the best financing terms and plans for your business.
Freight bill factoring (also known commonly as transportation factoring) gives owners of trucking companies a means to leapfrog the issue of stagnating cash flow. Factoring invoices allows companies of all stripes to sell unpaid invoices at a discount for cash upfront as the need arises. Approval happens in a matter of days, and once you begin factoring your invoices, you'll see funding within 24 hours. A Factor such as Accutrac Capital will pay you up to 97% of an invoice's value, less a nominal factoring fee that changes depending on the plan you choose, holding the remaining 3% in reserve. Once they collect on the invoice, the reserve will also be returned to you.
Though the fee is minor, the benefits to factoring are considerable. Having access to unrestricted cash flow lets you make the decisions you need to make in order to safely and effectively grow your business, taking better care of your fleet and drivers in the process.
How It Works
Step one: First you deliver your load as normal, and then you send digital copies of the documentation to your factoring company. This information usually contains the load, the rate confirmation, details about the customer you're running the load for, and any other important details and supporting documentation.
Step two: The freight factoring company that you have partnered with then runs a credit check on your customer, and sends you a notification when the parties been approved. This due diligence is in your best interest as a carrier because it ensures that the party in question is likely to pay.
Step three: When your customer is approved, you can begin factoring invoices later that day. Freight factoring companies will deposit the advance into your account. Depending on the factoring company, this advance can be as generous as 97% of the value of the invoice. The remaining 3% is typically held in reserve and remitted to you once the factoring company collects on the invoice down the line. This allows you to be paid right after making your delivery rather than waiting the 30 to 60 or even upwards of 90 days that slow paying customers take to pay on their invoices.
Finding The Right Factoring Company
A reputable and trustworthy freight factoring company can be identified in a number of ways. First and foremost, that company needs to understand the trucking industry and its myriad challenges. This is why smart owners who seek freight factoring will look for someone who works exclusively with trucking companies. Secondly, the best freight factoring companies will have a solid team of customer service staff on hand to help you not only understand various plans they offer but to also talk you through each step of the factoring process. Finally, look for a freight factoring company that helps you mitigate risk by running credit checks on current and prospective clients.
Follow these tips, and you will be maximizing your cash flow before, during, and after the delivery process. Your business will thank you for it.
