How does Freight Factoring Works?
If you’re a busy trucking company owner, it can be difficult to manage all the roles that are often required of you. And often, one of the most frustrating tasks can be dealing with payments, invoices, and the finances of the company. The trucking industry can be particularly challenging for new or small businesses, who struggle to stay afloat when they aren’t getting paid for 30,60 or even 90 days after delivering a load. These slow payments make affording payroll, fuel, and vehicle maintenance almost impossible, not to mention paying off debts or loans for equipment purchases or other business costs.
For a more in-depth overview of freight factoring, the process typically looks like this:
- A trucking company submits a factoring application and gets approved by the factoring company
- The factoring company determines which of the trucking company’s customers are creditworthy, and approves those they will factor
- The trucking company sends the invoices to be factored, and the factoring company advances you the payment with a 3% fee
- The factoring company works with the customer to send them the invoice and receive the payment
