Category Archives: Freight Factoring

Freight Factoring In The 21st Century

As the years go by, the way businesses must operate to be successful has grown increasingly complex. Working in the trucking industry requires a deft hand in these modern days. The economy is no longer a reliable barometer of business success considering how much it fluctuates in any given year.

When you combine market volatility with increasing technological demands within the transportation sector, trucking companies of any size have challenges meeting cash flow and growth requirements. As fleets look for innovative solutions to solving age-old problems, utilizing services like freight factoring can give them a crucial edge.

Freight factoring has been on the rise with trucking companies both large and small using it as a way to provide a better cash cushion during uncertain times. Even in non-uncertain times customers tend to take their time making payments. Letting outstanding invoices build for periods out to 90 days can deprive a business of critical finances in a busy business environment.

Whether it be to cover payroll, equipment or other overhead costs, freight factoring is a fast go-to financial backup resource for transportation operators of all stripes. When a company can turn an invoice into immediate cash, the pressure comes off the bottom line.

Still, not all freight factoring partners are created equal. Motor carriers must carefully evaluate who they partner with when handling sensitive financial transactions and tracking invoices. Proper research and careful vetting results in the right partnership.

It’s About the Financing

When setting out to find a freight factoring company that fits, it is important to ensure they specialize in the trucking and/or transportation industry. Challenges will arise, and an experienced freight factoring partner will be better able to help their clients meet those challenges. They should offer themselves up as trustworthy industry specialists.

Rather than offering just one plan or program, a good freight factor will offer at least a few separate plans tailored to fleets of different sizes and job applications. As an example, a trucking company who moves through their invoices quickly may want to opt for a flex factoring program with low fees of under .50% for up to ten days out from the date of payment. Larger fleets could opt for flexible lines of credit, retaining full control over their cash flow for fractional daily rates.

Is the process simple? Expect your freight factoring partner to compliment your business; you deliver the freight, send the invoice to the customer, copy the invoice to the factoring company and include all supporting documentation. Just like that, you should have up to 96 – 98% of the invoices value, with a small factoring fee taken off the top. The money is in your account within 24 hours. The remainder is held by the factoring company until the invoice is paid by the client.

Should there be any fluctuations within the economy, a trusted factoring partner can help trucking companies weather the storm. Even better, trucking companies don’t have to deal with the high interest rates from banks, but rather pay a small fee. Applications are generally processed very quickly, and the process is smooth.

Freight factoring is a perfect solution for startup trucking companies, high-growth enterprises looking for better cash flow or more capital, and businesses in transition, whether it be through a difficult year or a change in ownership.

The Future of Freight Factoring

Here at the QuickTSI blog, we pride ourselves in having our finger firmly on the pulse of the trucking industry, which involves knowing what is on the horizon. Now that freight factoring has become a standard financial services technique within the trucking industry, how will it evolve over time?

We recently reported on the new technology called blockchain and distributed ledger technology. Most don’t realize that blockchain technology can also have a significant impact on how freight factoring services are rendered. The answer lies in blockchain’s smart contract technology. There is now even a Blockchain in Transportation Alliance (BITA).

While blockchain technology has been most closely associated with cryptocurrencies, it can also be used in some interesting and quite technologically sophisticated ways. Companies are already developing methods and proving ways in which blockchain technology can be used to secure factoring partnerships and invoice transfers and transactions.

Since cryptocurrencies like Bitcoin cannot be used as payments within the transportation and logistics sector, mainly due to how the IRS classifies them. When a Bitcoin is transferred, it is considered an asset sale for tax purposes. Even more, since cryptocurrencies are so volatile, making a payment using them would hardly constitute equal value from one day to the next.

Yet, the transportation industry can still utilize the underlying blockchain technology within the freight factoring sector.

The Smart Contract

Where logistics and transportation companies and freight forwarders can get the most out of blockchain technologies is through the use of smart contracts. Smart contracts operate on a more advanced blockchain platform than Bitcoin. Rather than simply executing peer-to-peer transactions, the platform smart contracts are built on a technology that allows them to run a decentralized network.

A decentralized network – think: a cloud computing environment – is one in which developers can build applications without one company (such as Amazon) controlling the environment. On a peer-to-peer nodal network, everyone on the network is verifying the contracts being transmitted. Security is inherently guaranteed due to the nature of the system.

Even better, smart contracts are both flexible and robust. There are plenty of potential use cases where this technology can supplement, enhance, and provide a secure environment for freight factoring contracts and invoice-related transactions.

Still, this doesn’t mean that this technology will solve all of the problems associated with transportation-related financial transactions. Instant, net zero payments require instant capital. Longer payment cycles are much more appropriate for blockchain technology. This is where the freight factoring sector stands to benefit.

Efficiencies and Processes

Where this technology stands to make the biggest impact is in the back office. Blockchain technologies and smart contracts can help organizations streamline back office efficiencies, close any leaky financial gaps, create a better environment for systems integration, and wean them further off of financial loans from banks. This could create an environment where freight factoring service providers fill an essential financial need with a high level of security and redundancy.

A 2% fee spread out across 30 days still results in a high APR. Since freight factoring is not as simple as a single transaction, it takes more time and labor to implement. Servicing factored debt requires more resources than, say, a home mortgage. Trucking companies and others working in the transportation sector should not expect blockchain to change the fundamentals of how transportations facilitate transactions.

Factoring, as a credit product, requires a premium. By bettering the processes associated with the factored product and streamlining efficiencies through a robust blockchain technology, the cost of financing drops. This will drive down rates and allow for better margins on both sides of the transaction.

Looking at the history of freight factoring pricing regimes, it is apparent technology has already played a part in driving down overall costs. Rates around 5% are seldom seen these days. Anything at or less than 2% is considered average. By utilizing common data standards, the costs associated with the transaction will drop.

What it Looks Like

What would a freight factoring transaction in the digital blockchain space look like? First, consider the work flow.

First, the trucking company presents the invoice, approves and pays on a distributed ledger, confirms the rate, and follows through from invoice approval and final payment. Throughout the process the blockchain catalogs essential points on the transaction, such as load pick up, load tracking and load delivery.

Blockchain technology also allows for better systems integration. There are so many different ELD providers out there. Standardizing systems across platforms would not be a bad thing.

The essential question here is whether or not we will see trucking companies, both large and small, quickly adopt the use of this technology. By its nature, the trucking industry is fragmented and can be slow to incorporate new technologies and business methodologies. After all, whether one is a fleet manager or fleet technician, those working in the trucking industries usually don’t have computer science degrees. Will this technology be user-friendly enough?

The jury is still out on a lot of how freight factoring will evolve in the 21st Century. Technology has already had an impact. Will it have another? As you can always rely on, we will be right here telling you all about it once the verdict comes in.

What Should You Expect When Deciding On A Freight Factoring Solution

First, the common question: What is factoring? Factoring is financial transaction is a type of debtor finance where a business sells invoices, or accounts receivables, to a third party. This third party is called the “factoring” company. Businesses choose to factor their invoices to free up cash they are wait for a shipper to pay on.

There are many terms that explain factoring and many different types of factoring. Forms of this type of asset-based lending have been around for a long time and exist to provide cash-flow solutions for companies who need money in a pinch. For the trucking industry, however, there is only one that counts: Freight factoring.

One thing to note, however, is that freight factoring is not the same as “invoice discounting.” Invoice discounting involves a form of borrowing that uses the assets related to the invoice as collateral on the loan.

There are generally three parties directly involved in a freight factoring situation, with one being the factoring agency themselves, the party that sells the receivable (or invoice), and the debtor with the responsibility to pay the financial liability (usually the shipper or receiver). The invoice itself is considered a financial asset. When the party that sells it passes it on to the factoring agency, they generally take on the responsibility associated with collecting on the financial asset.

The deal is sweetened by the selling party, who generally sells the invoice at a discount or with an associated fee to get the cash they need. This part of the transaction provides the incentive for the deal. Factoring is used in many industries, from manufacturing to trucking.

There are essentially four distinct aspects to the factoring transaction:

  1. Includes the fee or discounted price paid to the factor.
  2. Any interest included by the factoring agency in exchange for the liquid asset.
  3. Any related bad debt expense associated with receivables that remain in place or uncollectable by the factoring agency.
  4. Any assumed credit risk, holdback receivables, or any other amounts required to cover unpaid or other types of merchandise returns. The factor’s profit can be gleaned from the difference between what it paid for the accounts receivable and the money it receives from the debtor party.

Factoring is used as a method to obtain cash. Whether it be to finance to equipment purchases or cover an existing cash gap, the factoring method can be quite popular. But the question or most companies who are considering factoring as an option is what they can expect when they choose to factor.

What to Expect from a Freight Factoring Provider

Not all freight factoring providers are created equal. They often provide different terms depending on the company. For those looking for really good factoring terms, there are specific items to look for.

First, does the factoring offer free credit checks or provide their own self-funding? These are important to relieving the burden on the party selling the invoice. Flat rate fees on invoices that have already been billed are also quite convenient. Low fees of around 2% can save a motor carrier big on the receivables they want to factor. Fleets should also be able to rely on fast and reliable funding, as well as both recourse and non-recourse factoring options.

Even better, does the factoring agency offer no monthly minimum volume fees? Companies that have been in the business for a long time often offer free online account management options through web portals, many times with always-on 24/7 access. Even better, some factoring companies provide load board access, fuel card discounts, and mobile app technologies with image capture abilities so that motor carriers they partner with can send invoice images digitally.

Freight factoring companies that go above and beyond won’t leave trucking companies to merely fend for themselves. They should offer highly experienced account executives to help manage your account. Furthermore, their low, competitive rates should be paired with same-day or next-day funding. When a trucking company needs their money in a pinch the factoring company should be able to come through.

They should also sweeten the deal with no long-term contracts or termination fees. Trust between parties is essential in any business relationship. When it comes to collecting on the accounts receivable, does the factoring company utilize professional collections options?

The Expected Process When Factoring

When a trucking company first reaches out to the factoring provider, they should reach a knowledgeable sales team ready to answer all their questions and address any perceived or unperceived needs. They should be able to go into great depth on how freight factoring works and be fully prepared for any “what if” scenarios.

Can they come through with paperwork and account management options? You can also glean a lot from what a factoring company has to offer through their application, both what is on it and the overall process. Once you have signed up, it is important that they put you in touch with a personal account executive.

Freight factoring companies will generally encourage their clients to complete a credit check on each of their customers so that they can get up-to-date information on who they should do business with. After all, the freight factoring provider wants to take on as little risk as possible, and so should the trucking company in question.

The factoring entity should also provide options to send either the proof of delivery (POD) or bill of lading (BOL). Your account management contact should be able to enter and scan invoices or provide you with a way to get them over digitally. When it comes to getting you your money, whether it is same-day or next-day, it is important that they offer many different options, whether it be via ACH, wire transfer, a physical check or a direct deposit.

One of the most important aspects of freight factoring is how the factoring agency treats your customers. If you want to keep your clients happy and coming back, it is important they are treated well, even when they owe money. Will your freight factoring partner treat your customers with respect? It is critical that they do so.

When they collect on your invoices, it frees your company up to do what it does best, which is keep vehicles on the roads and keep freight moving. A solid freight factoring company will have build a reputation and good relationships with brokers, shippers, and freight forwarders across the country. They should be a preferred factoring provider, even with those they are trying to collect from.

There is a term for collecting accounts receivables in a respectful way: Soft collections. You want your freight factoring partner to deal with your customers in a professional, courteous, and non-threatening way. Factoring agencies should provide debtors with different ways to get their invoices paid. When payments are made easier and faster, everyone wins.

The Many Reasons Fleets Utilize Factoring

The reasons motor carriers may use freight factoring are many. The most common reason is because new or small trucking companies may not qualify for traditional bank loans to cover their expenses while they wait to get paid. While freight factoring companies look at credit as a factor when doing business with a motor carrier, it is not the only factor.

Freight factoring companies collect directly from brokers and shippers, so it is your client’s credit they care more about than yours. So, if your fleet has less-than-stellar credit, that is generally okay in the eyes of the freight factoring provider.

Many companies may also have large freight invoices. With such a large amount of cash flow outstanding, freight factoring agencies can help make up the difference. When the money comes in right away, there are less impacts to the bottom line.

Another consideration lies in many fleets’ inability to collect or provide credit services. Small fleets and owner-operators likely do not have large back office teams. When clients pay late or don’t pay at all it can be a time-consuming and expensive issue. Collections work isn’t easy and often requires a large operation to follow through on the necessary steps. If your company doesn’t have the infrastructure to do so, a freight factoring company provides the answer.

Finally, factoring agencies often offer discounts for small trucking providers. It can be hard for small operators to get big fuel discounts or other types of breaks on every-day trucking items and equipment. Good freight factoring companies can offer more than just ways to cover your cash flow needs, they can also offer savings on everything from fuel to tires and truck maintenance.

The fact is, there are many different factoring companies and providers that can provide you not just with the cash you need to keep your operation running, but with lots of other side benefits as well. So, what are you waiting for? If you are looking for a solid freight factoring partner, keep these considerations in mind and then start your search.

What You Need To Know About Freight Factoring

Freight factoring, also known as “trucking factoring,” represents a form of invoicing and paying for freight that provides trucking companies with a way to turn invoices that have not yet been paid into profit for the company. This also works for the owner-operator model. Freight factoring represents a common way for motor carriers or trucking operators to plug cash flow gaps while they wait for shippers and freight brokers to pay the bill.

There are specific freight factoring companies who handle invoices in this manner. As an example, a freight factoring operator may handle tens of thousands of dollars in invoices per month and advance 90% of the money collected within those invoices. The rates they collect in return can run anywhere from 1 – 4% of the total cost of the invoices they pay out. This is different from a straight bank loan, which would charge an interest rate, as opposed to a percentage of the invoice total. To put it in more simple terms, freight factoring represents the process by with accounts receivable invoices are provided to the company at a discounted price.

Basically, the freight factoring company pays the trucking company an advance and then waits to be compensated by the shipper or freight broker who needs to pay the invoice. In most cases, the freight factoring company will also handle collecting from the clients. As a result, the trucking company does not have to deal with the stress of figuring out when they will be paid. This allows the trucking company to both streamline their cash flow while at the same time not having to deal with clients who are taking their time paying an outstanding invoice. Yet, this is not always the case, as we will learn more about in the next section.

Freight Factoring by Type

If you are a trucking company who is looking into freight factoring because you are tired of bumping up against the 30-day payment limit from the shipper or broker then make sure you understand the different types of freight factoring.  There are two different types of freight factoring, recourse and non-recourse factoring. But what’s the difference?

Recourse freight factoring refers to instances where a trucking company will sell their invoices to a freight factoring company that then pays the trucking company after the load has been delivered. In these cases, the days it takes for the operator to get paid may vary. The distinctive factor in recourse factoring is that the trucking company is responsible for collecting on the invoice. Recourse factoring is higher risk to the freight factoring provider because they must rely on a trucking company to collect on an invoice they have already been paid on.

For smaller trucking operators and owner-operators, recourse factoring represents a riskier proposition because if the trucking company cannot collect on the invoice, they are liable to the factoring company for the money that was paid out, and in some cases, fees may apply. This scenario could put a business at risk for a potential loss should invoices not get paid on time.

In non-recourse freight factoring, the opposite is true. When invoices are sold to the factoring company, the trucking company is not on the hook to collect from those clients. The factoring company pays you after the load is hauled and they assume the risk in the event the invoice is not paid up. Because this puts the higher level of risk on the factoring company, in many cases, a non-recourse factoring rate is slightly higher.

Small trucking companies and owner-operators typically look to non-recourse factoring as the most desirable option since the burden to collect is placed on the factoring provider. This avoids revenue-loss issues if there are collection complications. This way the company can focus on what they do best. Hauling the loads and getting freight from Point A to Point B.

Benefits for Different Size Operators

Freight factoring offers different types of benefits depending on the size of the operator working within the freight factoring framework. For small trucking companies or owner-operators, they can take on additional work without having to worry about whether that last invoice is going to get paid. For larger trucking companies, they can prevent interruptions in their cash flow operations.

Some businesses suffer from not being what are considered “prime borrowers.” Freight factoring eliminates this hurdle by letting trucking companies have their customers be judged based on their creditworthiness, rather than the trucking company itself.

Of course, neither small or large operators will get paid the entire invoice at once. As we mentioned before, the freight factoring operator will typically pay out 80 – 90% of the invoice’s value, then pay the remaining balance, minus their fee for the front, once the invoice has been paid by the customer.

Freight factoring terms and conditions will also typically be different depending on how much invoice factoring an operator needs. Freight factoring entities generally cater to operators of a particular size. If a larger trucking company wants $40,000 or more of factoring per month, they will generally seek different partners than a small owner-operator or trucking company that is doing business that requires less than $25,000 a month in factoring assistance.

What Fees are Associated with Freight Factoring?

Freight factoring companies charge different levels of fees depending on the company. Still, there are generally accepted and known levels of fees that trucking companies can expect when working with a freight factoring operator.

There are generally initial setup fees, which vary widely, then a transaction fee for the deposit. If the deposit is straight into a company bank account, fees are usually around $10. For wire transfers that occur on a per-transaction basis, fees generally run between $15 and $30.

The factoring company will also want to do a credit check on the client in question, which may carry a fee. There will also be a fee per invoice factored and then finally, a minimal commitment fee. Freight factoring companies will generally want to have a certain amount of invoice factoring committed, perhaps $10,000 or $20,000 for a smaller operator or more for larger companies.

While some freight factoring companies charge a termination fee if the trucking company no longer wants to work with them, not all do. For those that do charge a termination fee, costs can range anywhere from $500 to up to $1,000.

Qualifying for Freight Factoring

One of the great things about freight factoring is that it is a lot easier to qualify for than if you are trying to get a traditional business loan from a bank or some other type of long-term financing. When it comes to freight factoring, you don’t have to worry about whether you are a prime borrower or not. The reason for this lies in the fact that the factoring provider is more interested in the credit of your customer, rather than your credit. Your customer will have to repay the loan, after all. Still, trucking operators themselves must still go through a bit of a background check when signing up with a freight factoring company. Fortunately, the requirements are generally nominal. A business would need a decent credit score, a specific number of at least 530 or above, invoices that are outstanding at least to 90 days, and have been in business for 3 – 6+ months.

Larger trucking companies who want to factor tens of thousands of dollars at a time, which equates to a more long-term partnership, requires customers who are creditworthy – with a potential credit score being pulled – invoices outstanding out to 90 days, and at least two years or more of business history.

The costs associated with freight factoring generally depends on how long it takes the customer to repay the invoice. The freight factoring company may charge per week or per month that the invoice remains outstanding if it is a recourse factoring contract. This also varies based on the size of the company partnering with the freight factoring provider.

The higher the volume of freight being factored, there could also be additional fees. Some freight factoring providers charge one-time origination fees of up to $500 depending on the minimum requirements for them to factor your company’s freight.

Contract or spot factoring refers to a type of factoring that gives you flexibility to choose which invoices you factor. These situations require pretty high minimum requirements, $20,000 – $30,000 or more, and are mostly used by large trucking companies.

The bottom line is that freight factoring may be a good option for your business whether you are a large trucking company or a small owner-operator. Whether you need to utilize it to cover cash flow gaps or take on more contracts, projects, or clients, it can be a very helpful way to scale your business without having to worry about which of your customers are coming through on their invoicing commitments.

Still, the right type of factoring depends on the size of your business. We hope this blog post has helped inform your decision on the type of factoring that is right for you.

Freight Factoring Is About More Than Cash Flow

Fleet managers and owner-operators who haven’t been looking into the benefits of freight factoring may be missing out.  New ways of leveraging this financial instrument to boost operational efficiency are emerging.

Freight factoring is loosely defined as money advanced on accounts receivables by a third party, usually for a fee. Because it’s harder for small or new trucking companies to get a line of credit from the bank, factoring gives them a fast and reliable way to maintain an operating cash flow. Without it, many would be unable to purchase freight bills.

The Growth of Factoring

Freight factoring mainly serves to speed up cash flow. Since many fleets pay for their accounts receivables on the day they complete the delivery, factoring allows them to get the cash they need to carry them through to the next load. Factoring takes the waiting out of the game.

Factoring has been playing a role in trucking for a long time, mainly due to the need for a continuous stream of operating cash flow. Over the past several years, freight factoring has grown substantially.

As freight levels rise, carriers are looking to buy more trucks and get them on the road. Some fleets are discovering that they can tap their cash flow to make large purchases and grow their businesses. For many fleets, it’s a new way to use factoring.

The Evolution of Factoring

Companies who once only provided factoring services are now starting to expand into other areas. Beyond basic recourse and non-recourse factoring, some are offering financial services to fleets, from load-matching to purchasing fuel and equipment.

Freight factoring firms have grown into full-service providers that offer their clients more than the standard cash flow management solution. Now they are providing business tools that can help streamline operational efficiency over the long haul.

The standard accounts receivables factoring has been enhanced by a multitude of other services. Together, the combination of factoring and financial services provides trucking clients with full one-stop shopping.

The Future of Factoring

As factoring providers continually branch into other areas of business, expect these services to explode across the trucking spectrum. Whether it’s for fuel discount services, invoicing and collection services, online credit-history checks, or back office support, soon factoring will be forgotten as the thing that got these operations started.

With clients being able to find loads and run free credit checks on brokers and shippers, better decisions can be made regarding what loads they haul. Fuel finder apps allow truck drivers to see the best fuel prices on their designated route. Many factoring apps can seamlessly integrate account management functions with freight planning, making operations faster and easier.

Even emergency road service is appearing as another area factoring has touched. One company is providing an emergency road service through 36,000 vendors across North America. There’s no subscription fees, though there are transactional charges. With the number of aging trucks on the road, factoring services are playing a much-needed role.

Win-Wins in Factoring

Technology is reshaping the game in almost every industry, and factoring is not immune. The technology supporting factoring is getting more and more advanced by the year. The next wave in factoring immersion is going to be in the area of paperwork.

Streamlining paperwork is on every fleet manager’s mind. Many factoring organizations are now looking to roll out load boards specifically for their customers. Becoming a full-service provider of business tools and financial services locks in long term relationships with important clients. It’s a win-win for fleet and factoring provider.

Freight factoring 15 years ago was only considered for companies that had cash flow issues. Today, it represents a normal operating option for fleets of all shapes and sizes. As the economy improves and more players enter the trucking scene, expect freight factoring providers to continue growing their business. After all, offering crucial solutions for fleets looking to enhance their business is beneficial for everybody.

How Freight Factoring Could Work for You?

We all know what freight is, but it’s when factoring is added that it gets a little complicated. The word “factor” is both a noun and a verb. In this sense the word should be taken at its definition as a noun, which is the business of purchasing and collecting accounts receivable or of advancing cash on the basis of accounts receivable.

Whether you’re a solo owner / operator or running a 50 truck fleet, the ability to control and optimize your cash flow could make or break your business. A freight factoring company will pay you a percentage and assume responsibility collecting on the invoice. There are alternatives to this method, but they’re less appealing.

Opening a floating line of credit is an option, but this carries potentially higher interest rates and comes with its own inherent risk. With freight factoring there’s no debt incurred; nor are there any monthly payments.

 

It’s also impossible to walk into a bank with an invoice and expect money to be advanced based on said invoice. To them it’s merely just a piece of paper. They feel the risk is too great to assume if the customer does not pay. This is where freight factoring fills the gap.

How It Works

The best option will always be to invoice the customer directly and wait for their payment, but many customers can be slow to pay on their invoices. For those that need cash right away, freight bill factoring provides an additional option.

Transportation factoring is quite simple. It involves nothing more than giving your unpaid freight bills to a third party for less than you’d receive if you were to bill the customer and wait. This gives you faster access to money you need to fund your day-to-day operations.

Here’s how it generally works, step-by-step:

  1. You book your load.
  2. You send the details about your customer, the load, and your rate to the factoring service.
  3. The factoring service gives you the green light if your customer is approved for load factoring.
  4. You complete transportation of the load.
  5. Once empty, you send the Bills of Lading and load-related documents to the factoring service.
  6. Within 24 hours the factoring service will advance you an approved amount, which is usually somewhere between 60 and 90 percent of the total billing.
  7. Once the customer has paid the factoring service, you receive the balance.

It should be disclosed that freight bill factoring isn’t free. As business owners, it’s up to us to determine what services are worth the cost, based on our circumstances.

Freight bill factoring costs generally float between the ranges of 1.5 and 5 percent of the line haul revenue. The factoring service is provided as a retail product, a sale, as opposed to a banking product, or a loan. The risk associated with accepting the invoice is born out in the nominal fee.

Types of Freight Factoring

Freight factoring is not created equal. There are generally two types:

  1. Recourse-based: If the customer fails to pay the invoice, the factoring service can come back to you for reimbursement.
  2. Non-recourse based: If the customer fails to pay the invoice, you still get paid.

While some options allow for a load-by-load factoring, others require that all future loads be factored through said option. Many factoring services provide you with the option to choose how the relationship develops, depending on the customer.

This allows you to also decide whether or not you want immediate payment or payment when the invoice is paid. There’s a convenience in using the factoring service as a de facto billing service.

Not every service is right for every business, but if the ideas of a high interest bank loans or negative cash flows are unappealing, freight factoring may present an acceptable alternative.