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Article: What is Freight Bill Factoring?

Freight bill factoring is a form of business funding that enables carriers and brokers to finance slow-paying freight bills.

Running a transportation company, either a carrier or freight broker, can be both financially rewarding and challenging at the same time. One of the bigger challenges that company owners run into is moving loads from shippers who take up to 60 days to pay freight bills. This delay puts you in a position where you need to run your company – and pay for drivers, fuel, and repairs – while waiting for shippers to pay.

Few companies have the financial resources to meet that challenge and grow at the same time.

The solution

You can solve this problem by using freight bill factoring. This solution finances your open freight bills and provides immediate funding – offering many of the benefits of quick-pays without requiring shippers to pay sooner. If you use freight bill factoring correctly, it provides a stable financial platform that you can use to grow your transportation company.

How does it work?

There are two ways to structure a transaction. The most common method is to finance the freight bill with two installments: the advance and the rebate. The advance covers 90% of the freight bill and is funded as soon as you deliver the load and invoice your client. The rebate covers the remaining 10%, less the finance fee, and is provided once your shipper pays its bill in full.

However, small carriers may qualify for a single-installment transaction. In this case, the factoring company provides a single advance, usually between 95% and 97% of the invoice. The part that is not advanced constitutes the fee. Although this payment structure has the advantage of providing more immediate cash flow, it often has a higher cost than conventional transactions.

Additional services

We offer fuel cards and fuel advances to qualified carriers. Both of these solutions improve your cash flow and allow you more control over your funds.

Qualification

The qualification requirements for freight bill factoring are fairly simple. Your transportation company must:

  • Be a carrier or freight broker
  • Have all the proper documentation, authorities, and licenses
  • Work with creditworthy shippers/commercial clients
  • Have freight bills that are free of liens

Costs

Costs for the service range from 1.15% to 3% per 30 days and are calculated using a combination of your sales volume, transaction duration, and the creditworthiness of your clients. A financing facility can be established in as few as 3 days, provided you have all your company documentation in order.

Want a quote?

We are a leading freight factoring company and can get you funded quickly. Our plans have high advances at low rates. For an instant quote, please fill out this form or call (877) 300 3258 to speak with an expert.

 

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