Expand company’s vehicle fleet to take on new routes or haul additional loads.

Ensure money is available to bid on future jobs.

Improve cash flow and operate in a more efficient manner.

Ensure sufficient funds are available to cover fuel, vehicle maintenance and repair, containers, drivers’ payroll, licensing fees and insurance expenses.

Trucking and transportation are amongst the industries that have the highest advance rate. After buying the invoices the factor typically advances a large portion and takes out a small discount as payment. This is achieved by selling invoices to a factoring company. How does freight factoring work?įreight bill funding, or freight bill factoring is a working capital solution that allows a trucking business to monetize outstanding invoices and get paid almost immediately for work already completed.

The service allows them to get paid in 24 to 48 hours and requires dramatically less paperwork than a business loan (link to the advantages of factoring section of the accounts receivable page).įactoring requires dramatically less paperwork than a business loan and allows a trucking business to get cash in as little as 24 to 48 hours. That’s why many carriers rely on freight bill factoring to shore up their cash flow.

While many business opportunities exist, profit margins can be slim for small and mid-sized trucking and transportation companies due to heavy competition and the lowest bidder often securing the job. The shipper generally demands immediate payment, but the carrier usually doesn’t collect until delivery. Freight factoring services are most often used by freight, rail and trucking companies in the transportation industry.ĭue to the incompatible payment terms that exist between the shipper and the carrier, cash flow problems are common in the industry - even for freight companies that routinely turn a profit.

Freight invoice factoring