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Article: How to Finance Your Growing Transportation Company

Trucking companies and freight brokerages are cash-hungry by nature. Driver expenses, equipment expenses, and fuel expenses all need to be paid regularly for your company to run like a well-oiled machine.

The problem is that freight bills can often take up to 60 days to pay. Many shippers demand payment terms and work only with carriers and brokers who offer terms – putting you in the difficult position of having to offer terms or risking lost clients.

But what happens if you can’t afford to provide terms? What happens if you need money sooner?

Usually, the bank will not help you

One alternative is to go to the bank, hoping that a loan or line of credit might solve the problem. Unfortunately, banks seldom provide funding to transportation companies that are small or can’t show three years of audited financial statements. Well, if your trucking company could provide three years’ worth of financial statements that all showed profits, you would probably not need financing.

Quick payments – but without quick-pays

You would likely not have a problem if your commercial clients and shippers paid freight bills quickly – say, within ten days. You could deliver a load, get paid quickly, and cover your business expenses. You can achieve similar results by using freight factoring, with the added advantage of not requiring your clients to pay any sooner.

How does it work?

Freight bill factoring enables you to convert slow-paying freight bills into cash by financing them through a factoring company. You get immediate financing that allows you to cover your ongoing business expenses. You deliver the load, factor the freight bill, and then get funded quickly.

The transaction typically involves two installments. The first installment – the advance – covers up to 90% of the invoiced amount. The remaining 10% is held as a reserve to cover disputes or charge backs and is rebated (less a fee) as a second installment once the invoice is paid. You can finance as many freight bills as you want, as often as you require – giving you predictable revenues and complete control over your finances.

Flexible financing lines

One advantage of financing your transportation receivables is that the facility is flexible and can grow with your company. If you start taking more loads for more customers, we can finance them, provided that your shippers have good commercial credit and a solid payment record.

Freight factoring companies can provide you with incredible flexibility because the facility adapts to your sales – without requiring extensive underwriting.

Fuel advances

Our program also provides fuel advances to qualified carriers. This solution provides you with funding as soon as you pick up the load from the shipper. You can use these funds to cover the expenses of pulling the load to its destination.

Fuel cards

Most programs also support fuel cards, allowing you to reload a card from the advance. This provides you with operational flexibility and convenience.

Affordable costs

The fee is based on the length of time for which the invoice is factored and the monthly volume of financed invoices. Discount rates average between 1.15% and 3.5% per month based on these parameters.

Get an instant quote

We are a leading freight factoring company and can provide you with a competitive quote. We can get you funded quickly and offer high advances at low rates. For a quote, fill out this form or call us (877) 300 3258

 

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