Freight Bill Factoring is a Popular Way to Finance Trucking Companies
The process of freight bill factoring works, by selling the freight bills to a freight factoring company that pays you for them and then, waits to get paid by your clients. Freight bill factoring eliminates the worry of guessing when you will be paid by your customers. It provides you an immediate cash to carry out your daily productive work that includes money required to pay the drivers, buy fuel and pay for repairs. Freight bill factoring eliminates your collection worries because the factoring company will collect the debt from your clients. Freight bill factoring allows you to take new loads and projects with confidence.
Most freight bill factoring companies will now offer advances in excess of 90%. The rates are currently all over the place so it’s very important to shop around for a decent deal. If you’re running 5 trucks or more you should be able to find a deal around 3% flat for 60 days or a 30 day factoring rate structure of 1.8%. The fee is deducted and calculated based on the total amount of the freight bill. The more expensive factors will try getting you for whatever they fell they can charge you and get away with it. I have seen deals priced as high as 5% per 30 days, which would make it practically impossible to operate a trucking company with any profit. It makes no sense as the factor cannot earn any fees if their clients go out of business, but often they still try to sell these ridiculous factoring rate structures.
The newest change in the freight bill factoring industry is the reduction of all the paper work. The most technology savvy freight factoring firms are now funding client’s freight bills off electronic copies of freight bills and invoices. These more modern factoring companies have eliminated all the requirements for original copies of freight bills and invoices. However, the majority of freight bill factoring companies still require that client’s overnight original copies of invoices and freight bills before funding can occur. This practice is expensive and a complete waste of time for the trucking company. I would make sure you find a factoring company that has modern advanced processing systems in place to facilitate electronic factoring.
The freight bill factoring programs provided by invoice factoring companies allows you to turn your slow paying freight bills into immediate cash - eliminating the wait. Freight factoring is very easy to qualify for, quick to set up and inexpensive to use. This process shortens the payment wait time and gets your freight bills paid in couple of days.
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