Freight Factoring is utilized by many transportation companies to generate working capital. Transportation companies need working capital to pay drivers, purchase fuel and make repairs as they often have to wait 30 - 45 days after carrying the load to get paid.
Transportation factoring is available to owner operators with only one truck, or to larger fleets with several hundred trucks. Companies with larger fleets can benefit from significantly discounted rates while smaller companies can benefit from the extra services a transportation factor can provide.
Transportation factoring companies will often purchase receivables on a "non-recourse" basis. This means that if the customer fails to pay due to insolvency the factoring company covers the loss. If the funding is done on a "recourse" basis the client must cover the loss through the reserve account or by supplying more invoices for funding. Non-recourse is typically more expensive because of the credit risk, however, freight factoring companies are careful to only approve credit worthy customers.
Some freight factoring companies will hold an actual cash reserve while others consider the unadvanced portion of the receivable 'the reserve'. Factoring companies that hold an actual cash reserve will typically "release the reserve" on a scheduled basis such as once a month or every other week provided that there are no disputes.
Some transportation factoring companies will also provide billing services so that the trucking company is only responsible for carrying the load and supplying the bill of lading and rate confirmation while the factor does the rest. This is good for owner operators that do not have administrative support.
Many freight factors will even offer a subscription to an affiliated load board where owner operators can find loads or last minute back hauls. While load boards may yield thinner margins, it is better than coming home empty for most truckers.
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Customized Financing Options
Asset Based Lending
Revolving lines of credit up to $20,000,000
Accounts Receivable Factoring
No minimums, up to $20,000,000
Secondary lines of credit for ABL or Factoring
Equipment & inventory facilities
Great for staffing & temp agencies