Freight factoring is a process that allows businesses to get paid for the goods they transport once those goods are delivered. It can be an excellent option for companies struggling to wait the typical 30-60 days it takes to receive payment from their customers.
How Freight Factoring Works
The freight company delivers the goods and services to the customers and then sells invoices to the factoring company. The freight factoring company pays the freight company a portion of the invoice, usually 80-90%, within 24 hours.
The freight company customer pays the full invoice amount to the factoring company within 30-60 days. The factoring company then refunds the remaining balance to the freight company with less discount fee.
Why Is Freight Factoring the Best Option for Your Company?
Here are several benefits of freight factoring that make it a perfect option for your freight company:
When the freight company has built a good relationship with a factoring company, it can receive funding within 24 hours of invoicing the customer. This can significantly help tight cash flow, especially for startups or small businesses. For more significant firms, freight factoring can assist in maintaining a positive cash flow.
Since funds are easily acquired, freight company operators can concentrate on other business areas to enhance profitability.
Assists Freight Companies Avoid Debt
If a freight company cannot get paid on time, it may have to take out loans to cover expenses, including purchasing fuel, paying drivers, pulling more loads, and paying for repairs. However, if the freight company uses freight factoring, it can avoid this debt and keep its finances healthy while accomplishing all the tasks on time.
No Set Limits
Banks limits how much they are willing to lend to businesses; freight companies have to request increases which take some time before approval. However, freight factoring companies don't have set limits, meaning businesses can receive the funding they need when they need it.
Freight factoring is quite flexible, making it possible for small businesses to factor in as many invoices as they need to function efficiently.
Free Credit Checks
Freight factoring doesn't consider the freight company's credit score. Instead, they check the credit of the company the freight company is freight transport hauling for. When setting up your account with the factoring company, they check your client's credit on your behalf. It assists freight companies in getting to know their customers, reducing costs, and offering a sense of security.
Most factoring companies provide equipment loans to assist in growing your fleet from lofts to trailers and cargo straps. Equipment loans can help in fueling growth and meeting customer demands. Freight companies can finance up to 90% of the equipment purchases and acquire loans with a term of up to 2 years.
Freight factoring is an excellent option for businesses that want to multiply. The main benefit is that it provides same-day funding, which can be crucial for businesses with tight cash flow.
If you are looking for a list of potential clients for your freight company, look no further than the National Shipper List. This website provides a comprehensive list of companies that need freight services, making it easy to get the work you need. Contact us directly and get shipping clients for your freight business