What Is Freight Factoring Receivables
Why Choose Freight Factoring ?
Freight broker and trucking company freight factoring is a valuable financial solution for busy transportation professionals. Freight factoring not only does it ensure that carriers are paid on time, every time, but it gives trucking companies and freight brokers the working capital needed to ensure that they can continue serving their customers. The most important freight factoring benefit is instead of waiting for freight bills to be paid, they can spend more time focusing on matching motor carriers to loads and tracking deliveries. Freight Factoring companies that pay brokers can help them increase profit margins.
Freight brokerages and trucking companies often struggle to fund their businesses because conventional financing routes such as bank loans or expensive merchant cash advances don’t always provide the ideal solution. Freight Factoring on the other hand gives you immediate access to cash without incurring debt. The freight factoring company will pay your carriers or pay your trucking company as soon as the load is delivered. You pay a small freight factoring fee for the benefit of paying your carriers sooner.
The most common reason for freight brokers and trucking companies to choose freight factoring is improving cash flow. You can pay your carriers or fund your trucking business, your insurance and taxes, fuel, and other overhead expenses without waiting 30 or 60 days or even longer to get paid for the loads delivered. Freight factoring makes perfect sense within the trucking industry.
Here are 10 reasons of why any professional logistics company should consider freight factoring and how freight factoring benefits their logistics business :
1. Maintain a Reliable Cash Flow
All invoices have a payment period, but sometimes you can’t wait for customers to make good. Waiting can get especially worrisome if customers tend not to pay until the last minute and you need cash before the due dates for invoices roll around. Freight factoring gets you money when you need it so that you don’t have to rely on your customers’ timing.
2. Keep Up with Payroll
A slow season can cause stress for everyone in the company, including employees who expect their paychecks to continue arriving on a routine schedule. Invoice freight factoring allows to cover payroll costs and maintain the stability employees need to feel comfortable in their jobs until sales pick up again. Freight factoring helps you pay your driver on time every week.
3. Support Steady Growth
Financial challenges can hold you back from meeting the goals you set at the beginning of every year. Cash from freight factoring provides funds to invest back into the business so that you stay on track. You can also get the money you need to take advantage of unexpected growth opportunities in which you wouldn’t be able to invest without a quick influx of funds.
4. Make Upgrades
Higher quality products and services mean happier customers and higher profits. New equipment allows you to operate your business better than ever before, but investing in trucks can be cost-prohibitive. Use freight factoring to upgrade your company and start delivering more of what your customers want. Freight Factoring allows you to buy sooner.
5. Sustain Production
Fluctuations in trucking can create problems when consumer demand exceeds your production abilities. Not having up to date equipment can slow you down. By freight factoring invoices, you can keep up with demand and ensure every delivery is on time.
6. Higher Likelihood of Qualifying
Standard loans require a solid credit score, records of consistent income and some form of collateral. Invoices function as security for the loan when freight factoring, making it a lower-risk option for lenders and allowing them to use more lenient qualification terms. Freight Factoring gives you a yes to money quicker.
7. Provides a Mediator
Do you ever get tired of hounding customers for invoice payments? If you are freight factoring invoices, this responsibility passes to the lender. Lenders want to get paid, and they’ll make it a point to get money from customers on a reasonable schedule. This means they not only receive the interest and fees to which they’re entitled but also forward cash to you when you need it the most.
8. Stay Out of Debt
Loans, business credit cards and cash advances all require going into debt to receive funds. freight factoring your invoices, however, is simply a way to get early payment of funds you’re already expecting. The only expenses are interest and fees automatically deducted by the lender when invoices are paid. This makes freight factoring a viable way to help pay down existing debts without digging yourself in deeper.
9. Be Consistent with Marketing
Visibility and brand recognition are critical to staying ahead in a competitive market and require ongoing advertising efforts. Running ad campaigns to consistently engage with customers can be expensive. To ensure you can always invest in fresh brand messaging, consider using freight factoring to support marketing during slow times. Get your logistics company to the top!
10. Fast Cash without Shady Deals
Loan options with long lists of “guarantees” and the promise of quick receipt of cash often come with a catch in the form of predatory interest rates or lists of hidden fees. Choosing to freight factoring your invoices brings in money without tethering you to an unscrupulous lender. You can deal with the same bank through which you already handle business finances or use a reputable alternative lender.
When you are freight factoring you tend to get cash quicker which makes purchasing new trucking equipment easier than trying to wait 40-60 days on invoices to be paid. Freight factoring is the best choice for logistics companies to grow.