The Essentials of Freight Factoring

Aug 19, 2017 by

Managing your own business is often a very difficult task. There is a multitude of different elements that you have to manage, and money is one of the most important. Whether you are an independent trucker or you are the manager of a small trucking business, cash flow is one of the primary financial elements that you will need to address. However, this is not an easy topic to understand or to properly handle, and it can often lead to frustration and significant stress. Fortunately, there are a number of freight factoring companies that can help you manage your monthly cash flow. A recent article by The Trucker’s Report created a guide to help you enter into smart freight factoring agreements.

The basic definition of freight factoring is a system in which you receive a payment for an unpaid freight bill, from an outside company. Although you will be receiving less money overall, this allows you get your money more quickly so that you can afford the daily costs of your business. While this may be a good option for many truckers, it is important to understand some of the pros and cons of choosing this route, such as:

  • The fee associated with all freight factoring companies, which could be between 1.5% and 5% of your total revenue. However, you will be able to receive between 50% and 90% of your payment immediately, and you will receive the balance when your customer pays their bill
  • Some companies provide only recourse-based service, which means if your customer fails to pay, you must pay back the factoring company the amount they lent. Non-recourse-based services protect you from this possible outcome
  • Some companies allow you to use their factoring services on a load-by-load basis, to help you when money is tight, but others require you to use their service with all future loads for a customer

These are just a few of the differences to look for when choosing a freight factoring company. It is important to look into the company you are choosing, in order to find a deal that is right for you.

Deciding to pursue freight factoring can be a business saving choice for many truckers, and it may help you get through particularly hard times. While this article gives a brief overview of what you need to know about freight factoring, you should always look at your own financial information and do additional research to determine the best course of action for your business.

Although there are many freight factoring companies to choose from, they are not all created equal. On top of their standard practices, some companies also offer additional services to help your business. One such company, TBS Factoring, offers services such as advanced rates, fuel discounts, and discounted overnight billing. Choosing a company that offers high-quality service and other additional perks is a great way to ensure you get the most out of freight factoring.  

Related Posts

Tags

Share This

Leave a Reply

Your email address will not be published. Required fields are marked *