Factoring is a form of financing that allows you to finance your slow-paying invoices. It improves your company’s financial position, providing the funds it needs to operate and grow. Learn more by reading “What is freight bill factoring?” or visiting our product page.
This article highlights the advantages of freight bill factoring. It helps you determine if it is the right solution for your transportation company.
1. High cash advances improve cash flow
The most important advantage of factoring your freight bills are the cash advances. Factoring provides your company with the funds you need to pay drivers, buy fuel, pay for repairs, and pull more loads.
2. Fuel advances
Many factoring companies offer fuel advances. These advances provide you with funds once a load is booked. You can use the fuel advances to cover fuel or other expenses to pull the load. This add-on option enables you to grow your company when cash is tight.
3. Available to new carriers
Starting a carrier is time-consuming and very expensive. Few individuals have the needed cash reserve to start a carrier and pay the expenses of delivering their first loads. This is where factoring can help you. Factoring is available to new carriers that are ready to pull their first load.
4. Easier to get than other options
Getting factoring is very easy, and much easier than getting conventional financing. Furthermore, factoring companies understand that most individuals and companies aren’t “perfect” and can provide solutions in most situations.
5. Quick approvals
Most factoring companies provide an approval the same day that you submit your application. This is an important advantage for companies that need funding quickly.
6. No long-term contracts
No one wants to be tied to a finance company any longer than they need to. Most factoring companies offer short-term contracts that are flexible. In our case, we even offer a trial period. Note: Be careful of factoring companies that charge large termination fees. They can be used as a tool to keep you longer than you need to.
7. Helps you take on more loads/shippers
Factoring and fuel advances help ensure you have enough cash on hand so you can take new loads – and shippers – with confidence. You no longer have to decline a load (or new shipper) because you don’t have enough funds to service them.
8. Grows with your company
Most bank lines have limits. When you reach them, you have to negotiate an increase with the lender. Factoring lines are dynamic. They grow with your business as long as you are working with creditworthy shippers and brokers.
9. Non-recourse plans
Most transportation factoring companies offer non-recourse factoring plans. A non-recourse factoring plan limits your company’s risk if a shipper does not pay because of insolvency. Keep in mind that non-recourse plans tend to have slightly higher prices and more restrictions than recourse plans.
10. Customer credit checks
Most factoring companies offer unlimited credit checks on your customers. This feature is built into their service and you should take advantage of it. It lowers your costs and helps you work with high quality clients.
11. Access to load board and/or dispatch services
Many factoring companies bundle load boards or dispatching services with their programs. This is a great benefit for smaller carriers that are looking for more business.
12. Fuel cards
Factoring companies are integrated with fuel cards and can deposit your advances in them. This service provides you with flexibility to use and distribute funds as needed.
13. Stepping stone to other types of financing
Many carriers use factoring as a stepping stone to grow their business and then move on to cheaper financing. Future options include asset-based loans or lines of credit.
14. Access to additional services
Most factoring companies have well-developed agreements with other providers to the industry. They may help you get equipment financing, insurance, and other services from preferred vendors.
Get a factoring quote
We are a leading factoring company and can provide you with competitive rates and high advances. For a quote, fill out this form or call (877) 300 3258.