Understanding Freight Factoring Rates
Blog Introduction: As a trucker, you understand that cash flow is essential to running your business. When you’re not getting paid right away for each load, freight factoring can help bridge the gap and ensure money is coming in on time. But how do freight factoring rates work? Let’s take a closer look.
How Freight Factoring Works
Freight factoring allows truckers to receive an advance payment on their invoices. This means that once you deliver your load and submit your invoice, you can immediately receive up to 90% of the invoice amount from the factoring company. The remaining 10%–15% is held back until the customer pays the invoice. Once it’s paid, the remainder of the invoice minus any applicable fees is released to you.
Factoring Fees Vary Based on the Volume
Generally speaking, freight factoring fees can range from 2.5% to 5% per invoice, with different companies offering different rates based on factors such as creditworthiness and volume of invoices submitted for funding. The more invoices you submit, the better chance you have of negotiating lower fees from the factoring company since they will be receiving more business from you over time. Additionally, many factoring companies offer discounts or rebate programs if specific criteria are met (e.g., submitting invoices within 48 hours).
Freight factoring offers many benefits beyond just getting paid quickly for each load delivered! For example, having access to working capital can help fund your operations and keep things running smoothly. Some companies also offer additional services such as fuel cards and fuel advances which can be helpful when managing cash flow while out on the road. Finally, some freight factor companies also offer accounts receivable management services, which can help with collections if customers are slow to pay their invoices.
Freight factoring is an invaluable tool for truckers who need immediate access to working capital to keep their businesses running smoothly. With so many companies offering different rates and services, choosing a freight factor partner that best meets your needs and budget requirements is essential! With a little bit of research and due diligence, you’ll be able to find an affordable solution that will help keep cash flowing into your business!
This explains some of the Benefits Freight Factoring can have for you; keep in mind you still need to do your own due diligence when choosing a company to work with.