Submit the invoice, rate confirmation, and bill of lading to the factor which verifies load delivery. You pick up the freight, deliver it, and get your paperwork signed. Here is a Breakdown of the Freight Factoring Process: The benefits of receiving immediate cash typically far outweigh the fee.įor a deeper dive into what determines your factoring rate, visit our blog on Understanding Rates, Fees, and the Total Cost of a Factoring Agreement. Diversity base of your customers (referred to as “concentrations”)īased on these criteria, rates are typically 2% – 6% of the amount invoiced.Total dollar volume you factor each month.All factoring companies use a few essential criteria to calculate the rate: Determining your factoring fee is relatively straightforward. ![]() The first question you might be asking yourself is how much it costs. Is Freight Factoring Expensive for Trucking Companies? At the same time, the factoring company deals with collecting. After that, the invoice is off your hands, and you can run your trucking business with the funds in your account. Usually, a factoring company will pay you nearly, if not all, the total earnings of the load within a few days. Factoring eliminates the uncertainty, putting cash in your hands in hours, not weeks. You never know when a broker or shipper will pay sometimes, you may have to wait a long time for payment–and time is something you don’t have in trucking. What Service Does a Factoring Company Provide for Truckers?įactoring companies exist in the transportation industry to close the gap between delivering a load and getting paid. In exchange for this service, the trucking company gives up a small percentage of the amount they were owed to the factor–a small price to pay in exchange for keeping their wheels turning and their business running smoothly. In contrast, the factoring company deals with invoice payment processing and collection. Freight factoring unlocks the money your freight business has already earned so you can use the funds immediately.įreight factoring is a way for truckers to receive significantly faster payment for their services. It is a widely accepted method that eliminates the wait and worry of getting paid. In simple terms, freight factoring is a financial transaction that turns your freight invoices into immediate cash. What is Freight Factoring for Trucking in 2022? Freight factoring provides quick, affordable cash and eliminates the hassle of trying to collect from customers on your own. In the transportation industry, waiting weeks or even months to get paid is standard (ouch!)–most trucking companies can’t afford to wait that long. You still have bills to pay, fuel to deliver your next shipment, and food to eat.īusinesses in the trucking industry often turn to factoring companies for an immediate source of cash. Despite this, you still have a business to run, and you cannot afford to wait sixty or ninety days for that load you just delivered. ![]() In reality, receiving a freight payment can take anywhere from a week, if you’re lucky, up to several months after the paper is signed. Upon signing, the freight carrier or owner-operator confirms that the load has been accepted and will be paid. A freight invoice is a document the load recipient signs when you deliver a load at its basic level.
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