Factoring Freight Bills - The Easy Way to Finance Your Trucking Company
Running a transportation company such as a carrier or brokerage can be very challenging. Owners are constantly bombarded with concerns. There are drivers to pay. There are repairs to make. There is fu...
Many times that is easier said than done since in today’s business environment getting a business loan is close to impossible. However, there are financial options that work better than business loans – especially for growing carriers and freight brokers. One alternative is to factor freight bills. Freight bill factoring solves an age old problem in the transportation industry – slow paying clients – and provides financing to pay drivers, fuel and other operational expenses. It provides a platform for financial stability, enabling the carrier or broker to focus in growing their businesses.
Factoring provides a simple solution to the problem. The factoring company gives you and advance on your freight bills, and then waits to get paid by your client. In the meantime, you get the quick payments you need. You get the funding to meet business expenses and to grow your company. The initial advance is usually about 90% of your freight bill. You get the remaining 10% (less the financing fee) once your client pays the freight bill in full.
One major advantage of invoice factoring is that it’s easy to obtain. Factoring companies can extend financing if you work with credit worthy clients or freight brokers. Furthermore, they will also work with new companies and startups.
Generally, setting up a factoring relationship is very quick. Most factoring clients can obtain financing in 5 to 7 business days. Although accounts receivable factoring is not for everyone, it can help carriers and brokers whose biggest problem is dealing with slow paying clients.
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