Factoring service

Factoring Services for Owner Operators and Small Fleets

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EVERYTHING YOU NEED TO KNOW ABOUT FREIGHT FACTORING

One disadvantage, especially if you’re just starting out as a small business and trying to maintain a steady cash flow, is that late payments hurt your business. Unpaid invoices hurt your business, especially if you rely on incoming funds to pay your due bills. Sometimes you do get paid at the end of the delivery, but most of the time it normally takes 30-60-90 days to receive payment for the freight or cargo you dispatched. There is a solution to this called “Freight Factoring.”

What exactly is “freight factoring”?

When a dispatch company, owner operator, or small fleet owner sells the paperwork (e.g., proof of delivery, bill of lading, etc.) and invoices to a broker, they just wait 30-60-90 days to receive payments. That is the normal process, but instead of going through such a hassle, not to mention waiting that long to receive payments, they instead sell the invoices to a financial company for a percentage, so now they can receive their payment within 24–48 hours. This process is known as freight factoring or invoice factoring. It’s a quick, simple, and safe way to get the working capital you need.

How Freight Factoring Works

When you’re done with the whole dispatch process, if you don’t already have a trusted freight factoring company, you’ll need to find one suitable for your business based on your load, location, and industry. We already know this will cause you a lot of stress, and that’s where we come in. Our company has a vast network that can connect you to a trustworthy factor that can meet all your business needs.

When we find a suitable factoring company, you’ll be asked to fill out a one-page form. The form asks for basic company information, like name and address, and who your largest customer is.

After you’ve filled out the form, you may be asked by the factoring company to provide the following documents:

  • Current age of accounts receivable,
  • Corporate tax returns and financial statements,
  • Customer List,
  • Invoices,
  • For any current licensing agreements.

 

You are paid the agreed-upon advance by the factoring company. This could happen as soon as 24 hours after everything has been set up. Then, after your customer has paid the open invoice, the factor sends you the remainder of the invoice minus fees.

The Benefits of Factoring for Trucking Companies

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Financial Flexibility

A factored order may be refused by some drivers. The driver can expect to receive between 80% and 90% of the total order cost because he or she is doing the actual driving. A trucking company or driver agrees to a lower rate in exchange for a more stable payment.

A truck driver has a wider range of options. Accept factored orders to ensure a steady stream of revenue. Increase your revenue by taking on more full-payment orders. As your circumstances change and you become more cautious, you can adjust the ratio.

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Less risk

Truck drivers worry about not getting paid at all. It’s one thing to have unreliable payment schedules, but not getting paid at all is a bigger worry for them than that. Customer disputes, dishonest customers, and other things can all make it more likely that a customer won’t pay for the services rendered. This can be very bad for small trucking businesses or people who work independently. Many businesses have lost a lot of money because they haven’t been paid.

It’s clear that this is a big win for truckers. A truck factoring service takes on the risk of not getting paid. Instead of worrying about money, you can spend your time on other parts of running your business instead.

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Avoiding debt

If you want to start a trucking business, you don’t have to go into debt. You don’t have to get a business loan if you use freight factoring to get the money your company needs to run. Once the job is done, you won’t owe the lender any money. You’re just getting paid in advance for your work, with a small fee, and you won’t have to pay them back. The best way to grow your business without going into debt is to use the services of a freight factoring company.

Factoring for Trucking: Pros and Cons

As good as the factoring concept is, with a lot of advantages, it still has its cons. Every business, regardless of its size or origin, needs to weigh the benefits and drawbacks of a product or service before utilizing it for their business operations. We’ve looked into and made a list of the pros and cons of using factoring companies.

Pros of Freight Factoring

  • Swift disbursement of funds.
  • Unlike banks, your credit score or history is not much of a factor.
  • Avoiding debts.
  • Financial flexibility.
  • You don’t have to worry about payments from the customers.
  • Free credit checks on potential customers.
  • The value of your business isn’t lost or damaged.
  • Steady cash flow
  • It’s easy to get approved, and the process is quick.

Cons of Freight Factoring

  • Bills must be paid in full by or before the due date on the invoice.
  • To be approved, you must have good-paying customers.
  • Rates can sometimes be too expensive and higher than the normal bank loan rate.
  • Customers are notified when you change your payment address.
  • You may be held accountable if your customer doesn’t pay.

With so many disadvantages to freight factoring, its pros still outweigh its cons.

Always double check the form you are given to fill out before signing up for the services of a freight factoring company. Make sure to ask for clarification on any part of the agreement you do not understand, such as the factoring rates on a freight invoice.

Why Choose Fleetcare Factoring Services for Your Trucking Company?

Fleetcare is a dispatch company dedicated to helping truck drivers, owner-operators, and small fleets. There are tons of reasons truckers choose our company and the factoring services we offer. Continue reading to learn more.

At Fleetcare, we value our customers’ growth as it is our goal to make sure our clients get the very best, stress less and gain more. Yes, here we are focused on protecting our customers’ profits.

With our vast network of trustworthy factoring companies and a large team of experts with a vast knowledge of the trucking industry, we make sure to help our customers find the best freight factoring rates for their loads. If you’re ever confused or unclear about the whole process, we have a team of full-time customer service staff that are always in touch and ready to help our customers with any issue. We can provide 24/7/365 coverage. Our coverage ensures that we can handle any problem that may arise for any customer anywhere at any time.

Having this standard policy in place with our services in our company, we already have many customers who have used our freight factoring services, and they are taking advantage of the opportunities that freight factoring services provide (i.e., improving and boosting their businesses, financial flexibility, and stable financial planning). Well, are you ready to take your trucking business to the next level?

Everybody is invited to the table.

Contact us today!