What is Freight Bill Factoring?

There are many businesses that outlay cash in advance of getting paid. One of the most cash flow strapped businesses is the trucking industry.

Even though freight companies usually operate with significant profit margins, they have a substantial amount of cash outlay to deliver goods. Expenses include truck repairs, fuel, and even rentals; and no amount of profit helps when you are still waiting to get paid.

Many people ask, “How is freight billing different than regular factoring?”

In reality, it isn’t. Many people think freight billing has some sort of significantly different structure than regular factoring but it is more similar than not. Instead of the Factor paying on an invoice, they are paying on “freight bills” – goods that have been delivered.

Like traditional invoice factoring, freight bill factoring verifies the “goods” have been delivered without any potential offsets. The Factor will also be very interested in the debtor’s ability to pay. The qualification process is similar to traditional factoring and the rates can be very competitive.

Just like any other company, freight and trucking companies can realize the benefits that come from factoring receivables including stabilized cash flow and working capital to grow their business.