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What is Freight Factoring?

freight truck on the road

What is Freight Factoring?

Freight factoring is changing the game in the trucking industry. Gone are the days when transportation companies would need to wait weeks, if not months, to receive payment for outstanding invoices. With freight factoring, trucking companies can receive payment for their shipments even if the end customer hasn’t yet been paid. This helps ensure truckers and the companies they work for have continuous funds to stay in operation.

This said, there are several benefits to freight factoring. And if you are in the biz, you need to be in the know.

The Benefits and Cool Secrets of Freight Factoring

Before we get into the benefits, let’s discuss how freight factoring works. Here is a quick overview.

  1. A trucking company finishes a job and sends out an invoice.
  2. This invoice isn’t just paper; it’s sold to a factoring company.
  3. The factoring company immediately pays the trucking company, usually between 70% and 95% of the invoice is worth.
  4. The factoring company works to receive full payment from the end client based on the invoice’s terms.
  5. After the client pays up, the trucking company gets the rest of their money, minus a small fee for the service.

This method has some secrets and benefits that are changing the game for trucking companies:

  • Improved Cash Flow: Factoring means you get cash in hand fast, keeping the wheels turning, literally. You’re not waiting around for payments; you’re back on the road, taking on new jobs.
  • Avoiding Long-Term Contracts: Some factoring services don’t lock you into long deals. This means more freedom. You choose when and which invoices to factor in.
  • Ability to Haul More Loads: With money coming in fast, you can say yes to more jobs. This isn’t just good; it’s great for growth. More jobs mean more money.
  • Reducing Stress: Waiting for money is stressful. Factoring takes this weight off your shoulders. You focus on driving, not on when a client will pay up.
  • Spending More Time Growing Your Business: Less time worrying about cash flow means more time to think big. You can plan, dream, and expand. It’s not just about keeping the lights on; it’s about having the freedom to build and grow.

How to Get Started with Freight Factoring

Getting started with freight factoring is pretty easy, but you do need to keep your eyes open and do your homework. Here are some tips to help you get started.

  • Shop Around: Don’t jump at the first factoring company you find. Compare rates and terms. 
  • Understand the Terms: Read the fine print. Know what percentage they’ll advance, the fees, and how they handle unpaid invoices.
  • Check Reviews: Ask for referrals or check online for reviews. Word-of-mouth and satisfaction from previous clients can be very telling.
  • Submit Your Invoices: Once you’ve picked your partner, start submitting your invoices. 

Do You Need a Debt Collection Agency to Help You Get Paid for Outstanding Invoices?

If you have any outstanding invoices, they’re sure to be a source of frustration. But you can get paid. At AW Collects, we have experience in the transportation debt collection space. We can help you get caught up and receive payments on those unpaid invoices. We’re happy to provide guidance to help you get started with freight factoring so you never have to worry about getting paid again. Give us a call, send us an email, or fill out our online contact form

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