What Are The Advantages of Using Freight Factoring?
Updated: Mar 16, 2020
Having the right type of financing for your business is important in any industry. But consistent financing in the trucking industry is critical for success. Between the high cost for fuel, truck expenses, insurance, and additional fees, trucking companies are vulnerable to issues with inconsistent cash flow. If your company is operating with low cash reserves or are wondering how freight factoring can benefit your company, here are some advantages!
Consistent cash flow
The biggest advantage of freight factoring is that your cash flow will be consistent. It puts you and your business in a better position to cover all your expenses.
It's no secret that without freight factoring or quick pays you can be waiting up to 90 days to get paid on a load - and no one has time for that! When you work with a good freight factoring company you can get paid as fast as 24 hours. Being approved by a factor can also happen as fast as one business day, allowing you to address any cash flow problems and get you back on your feet quickly.
Factoring companies typically work with all brokers. This makes it easier on you as you can send all your invoices to one place to get funded. You don't need to worry about getting additional loans if you run into difficulties, you just send extra invoices to your freight factoring company to increase your cash flow.
Unlike applying for a bank loan, working with a freight factoring company is more flexible. Unless you have major problems and your customers are good, you will typically be qualified to work with a factor. Freight factoring also allows you flexible access to cash. Credit lines will usually carry a hard limit; however, freight factoring relies on the number of invoices you send in a month.
When working with a good freight factoring company, you will get a high initial advance of the invoices. You can get 95% or more advance, depending on what the factoring fee is. There are also programs that will factor fuel advances as well.
One of the biggest advantages of using freight factoring, and often most overlooked, is that it allows and helps your business grow. With freight factoring you can grow your business by adding new customers and hauling more loads as you no longer have to wait to get paid and will be able to pay the additional expenses of expanding your business. Most factoring companies will also credit check your existing customers and any new ones you hope to work with to allow you to work with the best clients.
If you want to learn more about how freight factoring can help you business grow give us a call today - (205) 397-0934