Trucking factoring service is also known to many as freight factoring services. It’s an available financing option for transportation factoring companies. The benefits of freight factoring companies will help the company grow.

Indeed it’s a solution for freight companies to pay for fuel, fund road expenses, cover payroll, and will give you the opportunity to take more loads. Instead of waiting longer to get paid for the loads you’ve hauled, the trucking factoring service always puts cash rolling.

Understanding Trucking Factoring Service

As a carrier, it can lead to a great deal of freedom. However, getting paid on time might be a challenge. You might get paid when delivery is done if you’re lucky enough. But usually, trucking companies wait for days or months to see cash for the cargo being hauled.

The factoring company actually deals with invoice payment collection and processing. And in exchange for the service, the truck driver gives a small percentage of the amount they were owed to the factoring company. Other than that, factoring companies usually charge additional fees for the services. So it reduces the amount that you earn on the load.

In other words, the trucking factoring service helps the company prevent any headaches of slow and late payments. It keeps the cash rolling, which is needed for business.

Here are the things to know about trucking factoring services:

1. Knowing its Main Purpose and Process

Truck factoring service is a type of invoice factoring for trucking industry purposes. First, you should know that it is not a loan. Instead, it’s a process of selling the outstanding invoices to the factoring company for a cash advance.

This service is more straightforward than traditional financing. The process of application for freight factoring is usually fast. Afterward, you may receive the cash for the freight bills not more than one day.

2. Know and Understand the Fees and Rates

Every factoring features an advanced rate to combine with a factoring fee. The rates may vary on different factors, which include the volume of monthly billing, factoring fee structure, and the chosen program.

In terms of volume, the company with various truck billing about 100,000 dollars per week will likely pay lower fees than the company with only one billing of $3,000 per week. More trucking factoring companies offer discounts, so the rates will decrease as you grow.

And just a piece of advice, you should avoid service fees, which include minimum volume fees, application fees, and early termination fees. Many factoring companies don’t require it.

3. Understanding the Needs of the Trucking Company

The needs of a trucking business should define the type of factoring program you choose. The factoring rates may be from the company’s needs, so the money you have earned may go further.

You should only maintain a steady cash flow as it is essential always to keep the business running. Also, truck factoring may benefit the trucking company if you need funds for fuel, repairs, insurance, and hauling loads.

4. Decide if the Service is Right for the Business

Consider a few things if the trucking factoring service suits your needs. First, if you have a trucking business, you must wait for brokers and shippers to pay and know your best candidate for the freight factoring.

If there’s a chance you can’t haul the loading next because you are waiting for payments from the customer, then you know that you will need the transportation factoring. You have to bridge the gap between what they owe you and in terms of making money. It’s where the invoice factoring comes from. The freight factoring also allows helping a trucking business to thrive.

Things to consider when deciding on truck factoring:

– It’s OK if you have bad credit or even no history of credit at all. The approval for track factoring applications varies on the creditworthiness of the customer.
– There is an unlimited amount of cash that grows with the business.
– You don’t have to worry about cash flows that will slow you down.
– Cash is always available the same day.
– The initial funding does not define the credit line.
– Fuel card programs and fuel advances are always available for freight brokers and trucking companies.

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