What is the Process of Freight Factoring?
Updated: Mar 16, 2020
Carriers are often worried about the rate from a factoring company before they even know what the factoring process is. Often there is a connection between how much you pay and what you get from your factoring company. This is why it is important to know what the process of factoring is, so you don't have any difficulties or surprises once you're signed up.
Once you make the decision on who you're going to factor with, they will approve your shippers and brokers, and you can start factoring your freight bills. These are the 4 basic steps to factoring:
You book a load and receive an email (rate sheet) confirming the agreed pay amount for the load
You have a BOL signed by the shipper to confirm pick-up. At the load drop-off, you get the BOL signed by the receive to confirm the drop-off.
Once you drop the load, you send the BOL along with the rate sheet/confirmation to your factoring company. Simply take a picture of your freight bill and send it in.
If necessary, your factor will verify the freight bills. The factor then advances you the money (minus their factoring fee) which will be available either later that day or the next day depending on your preferred funding method (ACH, bank wire, or fuel card)
While these are the basic steps, each factoring company is different. The expectations change based on who you're working with and what program you're set up for. For example: for some factoring companies, recourse client are responsible for their own collections while others (like Porter Billing Services) handle all collections for every client. That means that we, as the factoring company, will work with your customers to collect on the freight bills you factored with us. While this is taking place, you can send in additional freight bills and the cashflow process keeps going.