Freight Factoring Services
If you are a trucker or own a trucking business, you know that time is of the essence to you, but not necessarily so to your clients. The industry standard time period to fully process payouts to trucking companies and drivers is 40 days, sometimes more. As you’ve probably experienced, a time frame of this length can be a dealbreaker for a freight company budget. In fact, it’s not uncommon for many companies to occasionally look to other means to get by financially.
Many clients also don’t realize that the word “freight” includes the fees and charges incurred by transportation of the goods. These charges are normally covered by the shipper and may vary depending on the following factors:
- Distance traveled
- Nature of goods being transported
- Expected delivery timeframe
What is Freight Factoring?
Freight factoring, or trucking factoring, is a great solution to the payout delay issue that plagues many trucking companies and drivers. Freight factoring allows a trucker to be paid on the spot instead of waiting the full 30-90 days to receive payment. How is this done?
- A trucking business or owner/operator makes their usual delivery run.
- When the delivery is completed, the business transfers or “sells” their job invoice to a third party - the freight factoring company.
- This freight factoring company then “buys” the invoice for a slightly lower amount than what is owed in total.
- The freight factoring company pays the truck driver or trucking company immediately.
This fast and easy process allows the trucking company and their drivers to carry on business as usual while the freight factoring company handles the invoice. The waiting process is taken off the freight company’s shoulders, which then leads to an increase in working capital to keep the business afloat and moving in between those crucial payouts.
Why Choose Freight Factoring?
Get Paid Immediately
If you’re a trucker or owner of a freight company, you may be weighing the benefits of going with a freight factoring company. You may ask yourself: “Why would I forfeit a portion of my profit for something I can do myself?” That’s a fair question. But have you considered the efficiency and relief that would come from being paid upfront and having the invoice and collections process handled for you?
A 2017 report from the American Transportation Research Institute found that the average cost of running a truck comes out to be $66.65 per hour. Factor that in with how time-consuming being on the road is, and everything involved in running your business. Can you really afford to wait an additional 30-90 days to get paid for each delivery?
Avoid Going Into Debt with a Bank Loan
Freight factoring also enables you to get cash fast without creating debt. Some trucking businesses go the route of securing a bank loan to cover their expenses, but this route is significantly different.
First of all, your current credit status could prevent you or your business from qualifying for a loan altogether. Additionally, securing a bank loan to fund your expenses may affect your ability to obtain loans for necessary equipment. Is that a risk you want to take?
Why Partner with Prime Factoring?
If you decide to go with freight factoring, you need a reliable freight factoring and invoice factoring company that has your back. Does your business need a bit more built-in flexibility? You can also open a factoring line of credit (FLOC) with Prime Factoring!
Prime Factoring will reduce your cash flow to-do list and subsequent office work so that you have more time to focus on what matters most - getting your loads delivered and keeping your customers satisfied.
Go ahead and apply today! We’re eager to serve you!