You may have heard ads on the radio offering Truck Factoring or Freight Bill Factoring. It’s easy to think it has something to do with financing the truck itself, but in reality it is surprisingly similar to traditional invoice factoring.
A freight factoring company is interested in factoring invoices on freight bills. That is, goods that have been delivered.
One advantage is that the freight company itself is unlikely to get any “offsets” that the creator of the goods might. The freight company delivers the goods and their compensation, like most transactions, is in the form of invoice.
Like traditional underwriting methods, the factor will look at the customer or debtor for the strength of the deal, not the trucking company itself. This can be a big help to start up companies or companies with a less than perfect track record wanting to finance their business.
Also called “Transportation Financing,” this industry has cash flow challenges like any other business. Operational expenses include fuel, truck repairs, and rentals. Although profits can be great, it can be challenging if you are still waiting to get paid and your expenses are immediate.
Once the account has been set up, funding occurs at the same speed as tradition factoring transactions, usually within 24-48 hours.
If you are interested in freight bill factoring you will typically need to deal with a factoring company that specializes in this area.
Although you may get the attention of a diverse factoring company, one that specializes in transportation funding can provide the quickest service and the best price.
The trucking industry is notorious for cash flow issues through no fault of their own. All of their capital is put into the delivery of the goods and then they must wait for their Clients to pay for their invoices. With the high costs of fuel eating at profit margins, Trucking Companies must use their capital wisely to bid on new opportunities to offset cashflow issues. Accounts Receivables Factoring will do just that.