Freight Factoring has benefits to owner-operators and other trucking companies.Everything About Freight Factoring

What is freight factoring? Is it hard to start factoring? Is it beneficial to factor? If you are curious about factoring, you’ve come to the right place. Read on for an in-depth explanation of freight factoring and its many benefits to owner-operators and trucking companies.

Many new owner-operators have misconceptions about what freight factoring is and how it can help them streamline their trucking business. In this guide, we explain freight factoring and provide more information about this essential service. We also touch upon those things to watch out for when considering signing up with a freight factoring company.

But first things first.

There are many potential rewards associated with working in the trucking industry like:

  • the pure joy of the open road
  • the ability to run and manage a successful business where there’s always a steady demand for services
  • working for yourself and setting your own schedule

Opportunities in the trucking industry have been growing every year. If you are thinking about starting your own trucking company but haven’t done so yet, take a look at the steps outlined by the US Small Business Association. Every business has its rewards as well as its frustrations.  One of the most common frustrations experienced by truckers, especially those who are owner-operators, is getting paid promptly. Many of the clients that you’ll find on reliable load boards have payment procedures in place. These procedures often result in unavoidable payment delays. Of course, this doesn’t change the fact that you still have bills to pay and other obligations to meet. Many owner-operators and trucking companies use freight bill factoring services to ease the burden of waiting for payments. In this way they create steady cash to keep their businesses running smoothly.

Why Do People Use Freight Factoring?

Many companies take anywhere from 30 to 60 days to pay their invoices.  This can cause serious cash-flow problems for owner-operators who need money to pay for fuel and other expenses to keep on driving. Luckily, there’s a solution.

  • Owner-operators and trucking companies who sign up for factoring services don’t have to wait to get paid
  • In many cases, the factoring company will pay the factored invoice within as little as 24 hours
  • You can usually complete the application process quickly and online
  • “Excellent” credit isn’t a requirement for applicants
  • Owner-operators can keep driving knowing that their money will be paid promptly on delivery of their loads
  • Owner-Operators never have to stress out about going after clients for payment

Companies like Pay4Freight that offer factoring services understand the unique needs of truckers and owner-operators.

How Does Freight Factoring Work?

  • With freight factoring, you’ll sell your most recent invoices to a reputable company like Pay4Freight.
  • When you factor your loads, you will no longer have to worry about collection headaches
  • You’ll get most of your money up front, while getting the rest when your client pays
  • You’ll pay a small fee for this service
  • It can be well worth it when you consider the many benefits of having steady cash on hand as well as not having to stress about chasing after the money

What Can It Do for Your Business?

  • When you have a steady flow of cash from your recently completed loads you can run your operations with greater certainty and efficiency
  • You might, for instance, use your factoring payments to update your existing trucks or add to your fleet
  • You could use that capital as a way to take on more clients
  • Or you could use it to ease the burden of expenses for maintenance and fuel

Who Can Qualify?

Anyone working in the freight transportation industry as an individual independent contractor or as a company can take advantage of factoring programs. In addition to large companies with extensive fleets, freight factoring can help smaller companies with a single truck too.

Truckers take to the open roadHow To Choose the Best Freight Factoring Company for Your Needs

Every person is different and each company is unique. There are many things to look out for when choosing a freight factoring company.  We urge all people interested in factoring to do their homework. Most of all do not sign long-term contracts without reading the fine print.  Read more about how we structure our contracts so they are honest and transparent and easy to understand. We’ve also put together a 5 point guide to help people evaluate factoring companies with some tips about what to look for and also the red flags to look out for. Freight factoring can make a big difference to a company but it’s so important to factor with a reputable company.

Different Kinds of Factoring

You get different kinds of factoring and it is important to understand the pro’s and cons of each type factoring. For more information, read more about recourse vs non-recourse factoring.

At Pay4Freight, we have helped many owner-operators and small t0 mid-sized trucking companies grow year-over-year. Many of our clients (who we refer like to as “partners” have stayed with us for years and years and that says something).  If you are interested in working with a company with strong ethics, find out more about what drives us every day or give us a call at 888-479-4378 or send us an email.

Ready to Sign Up for Factoring?