Freight factoring is a service that helps trucking companies get paid faster. The freight factory company buys invoices from a trucking company for a fee, and pays them very quickly, often within 24 hours. Then the freight factoring company sends the invoice to the customer and receives payment from them.
For busy business owners, freight factoring helps you to ensure you and your team get paid on-time. Instead of waiting 30 days or more for payment from brokers or shippers, you can get paid the same day with freight factoring. While it does have a fee, it’s well worth the cost in order to keep your business afloat.
Obtain Payroll Faster
Using a payroll factoring service is great for truck drivers who want to be paid immediately. It’s also helpful for new or small businesses that have a lot of overhead costs and expenses, particularly if they had to buy new equipment. Freight factoring gives you more control over your cash flow, and allows you to keep working and paying your employees even if the broker hasn’t paid for the load delivery yet. It also empowers you to stay up-to-date with loan or debt payments that you may have from starting your business.
Freight factoring is a fairly simple process. First, you haul and deliver the load for your customer as usual. Then, you send the invoice to the freight factoring company. The company buys the invoice, and sends you the necessary payment. The freight factoring company then sends the invoice to the customer, and gets paid by them.
Is Freight Factoring the right choice for your business?
Though the service has been around a long time, it has a reputation for being only for struggling businesses. But this is not the case, and can be extremely beneficial to businesses of every size. So how do you know if freight factoring is the right choice for your business? You might want to ask yourself these questions to determine if freight factoring will benefit you:
- Do your customers take a long time to pay you?
- Is your lack of cash flow impacting your ability to function and grow as a business?
- Are you spending a lot of time tracking down payments?
- Are the slow paying customers making it difficult to pay your vendors on time?
- Are you at all concerned with your customers’ trustworthiness or guarantee that they will pay you?
If you answered yes to those questions, then freight factoring could be a great solution for you. Not only will you save time on sending and tracking invoices, but you also avoid the stress of cash-flow issues and slow-paying customers. You can be confident in your moves as a business as you take on more contracts or hire more employees because you don’t have to wait on payments.
The regular payment schedules for freight deliveries can take up to 90 days, which just isn’t realistic for most small businesses. You need an income to cover necessities like payroll, vehicle maintenance, and fuel – not to mention money for marketing and business development. By using freight factoring as the middle man, you can keep focusing on growth and delivering an excellent service, not on tracking down payments.