If you’re a trucker, then you understand that long pay terms are common in the industry. You can’t force your customers to pay you immediately. Otherwise, they’ll find other trucking companies that favor their payment preferences. You need to adapt. And that’s why you need freight factoring.
Freight factoring is when truckers or freight trucking companies forward their unpaid invoices to a freight factoring company to receive the full payment. Truckers no longer have to wait for the original payment and the freight factoring company takes on that liability. This way, truckers can focus more on their operations instead of worrying about money to cover their daily expenses.
- How does freight factoring work?
- How much does freight factoring cost?
- When should I use freight factoring?
- Do I qualify for freight factoring?
- What are other benefits of freight factoring?
How does freight factoring work?
A freight broker will apply with a freight factoring company. Once approved, the broker will sign a contract and the freight factoring company will notify the contacts, customers, and freight broker agents where they should send future payments.
How much does freight factoring cost?
The cost of freight factoring will vary based on the needs of the trucker or freight shipping company that is using the services. Many freight factoring companies have no minimum monthly fees, no setup costs, etc. Shop around to find the arrangement that is best suited for you.
When should I use freight factoring?
Reflect on the cash flow situation of your business. If it’s running smoothly with a steady cash flow, then factoring is not for you. But if you have clients who pay slowly or demand payment flexibility, or you need quicker cash flow to fund daily operations, then consider freight factoring.
Do I qualify for freight factoring?
It depends on your customers paying habits. Freight factoring companies look at more than just your situation. They may also look at the credit reports of your customers.
What are other benefits of freight factoring?
Some freight factoring companies include additional services on top of their financial advantages. For example, freight factoring company, CST Financial offers more than just loaning money. They handle rate confirmations, collections, customer/carrier setups, fuel advances, and filing on brokers bonds if needed. Also, they maintain your customers’ ongoing credit checks and process paperwork for your customers.