How Your Trucking Company Can Profit by Using Factoring
Updated: Mar 16, 2020
If you run a trucking company, you know that there are weekly and monthly bills that needs to be taken care of. From salaries to fuel to insurance, the bills don't stop when you don't get paid on time. When shippers pay anywhere from 30 to 90 days after the load has been dropped, ensuring that you have consistent cash flow is important to maintain the operations of your company. Instead of borrowing money from the bank or other loan agents, invoice factoring can help your trucking company profit.
Invoice factoring can benefit fleets of all sizes as it is a great way to manage cash flow. Invoice factoring is very simple: A carrier hauls a load with a shipper like they normally would. If the shipper has been approved by the factoring company, the factor buys the accounts receivables and once the carrier has dropped the load they will submit the invoice to the factor and the factor will pay within 24 hours of submitting the invoice (minus the factoring fee). The fee varies depending on the factor you use, the services they offer, how long you have been in business and the size of your company, and whether you do recourse or non-recourse factoring.
The advantages of using a factor to profit your company:
You get paid quicker - the same day or within 24 hours
It takes time away from chasing shippers for payments - in a non-recourse program, your factor will deal with all the collections so you don't have to worry
No charge backs - With non-recourse factoring, the factor will take the fall if a broker shipper doesn't pay.
You won't need to stress waiting to be paid to pay bills on time - you will have consistent cash flow to pay your employees, your insurance, your truck fees etc.
Additional services - the best factoring company's will offer additional services to help your company grow like dispatching, fuel card advances and benefits, insurance and compliance partners, and more.
In order to get the best for your company, you need to pick the best factor for you - which means do your research. There are many factors out there who are not looking out for your best interests, so it is important to know exactly what you are getting into before signing a contract.
Do they offer contract options? Before signing up with a factor, make sure you know the term of your contract so you don't get stuck into something you don't want to be in. Porter Billing offers month-to-month, 6 months, and yearly contracts.
Is the factoring fee flat rate? Some factors offer tiered rates starting very low but will increase rapidly due to their terms. Understand if the rate you sign up for is flat or tiered. We offer true flat rates when you factor with us.
Will you call into a 1-800 number or have a direct dial of your account manager? It is hard to work with a factor that you can never get on the phone. Not being able to talk to your account manager is a pain and affects your company negatively. Our clients work with their own personal client representatives who know your company's wants and needs, and you will have a direct dial to get in touch with them.
Are there hidden fees that you don't know about? Sometimes factors can get you to sign on with them by offering you a very low rate, but don't tell you about the minimums you need to factor each month. Porter has no monthly minimums on 1 or 2 trucks, and there are no hidden fees. You know exactly what you're signing into.
Do you trust your factor? Trust is extremely important when it comes to choosing your factor. You a trusting them with helping your company. The best way to know how other people in your position feel about a factor, look at the client reviews.
Porter Billing services is dedicated to helping your trucking company grow and keeping your cash flowing, so you can focus on other things like staying on the road.
Get started today! Fill out this form and one of our factoring consultants will be in touch with you to learn about your company and it's needs.