Freight factoring is a type of business that works mainly with trucking and freight moving companies. Using a factoring service for a company is an alternative way that a freight company can finance itself. Freight factoring does this through buying jobs from the customers and then helping freight companies find those jobs much more easily. This makes it so that freight companies will always have the money necessary to keep operating and growing.
Freight companies will not have to spend a lot of time bidding or searching for freight jobs anymore because they can just find one through a freight factoring company’s assistance. Freight factoring companies also make sure that truckers are paid for their services because the freight factoring company will be the one handling the receiving of payments from the clients.
The way freight factoring works is pretty standard. Just like you would in a normal job, you would still charge your clients some money to finish the jobs. The freight factoring company that you have hired will then be the ones in charge of collecting payments from your customers. These freight factoring companies will also give you an upfront payment of the money if you have already completed the job.
This saves you the trouble of having to collect payment yourself, and it also reduces the risk of not getting paid by flaky customers because it is the freight factoring company that will be the one to handle receiving the money from your clients. As long as you finish the job properly, you should have not troubles with a freight factoring company. In fact, it can be better for your company because a freight factoring company will make it easier for you to handle the various processes of a job. This is because you can just concentrate on moving the freight, without having to worry about the payment.
Different freight factoring companies will charge different amounts of money. In general, most freight factoring companies will charge you around a percentage of the total job’s payment. For the initial payment of the bill, most freight factoring companies also give you around 90% of the total cost of the job. You will receive the remaining amount, in this case, example, the remaining 10% of the job’s payment, after your client has settled the bill with the freight factoring company.
Of course, you would have to finish the job. Once it is finished, however, you can expect to receive the full amount, you are also given essentially in advance a percentage of the amount you would have been paid even before you finish the job itself.
Freight factoring is an especially essential service for small owner-owned freight companies. This is because the operators of these small companies do not have to worry about having to deal with accounts receivable or collections. The freight factoring company will handle funding accounts receivable, and bill collection. This will leave the small business operators more free time, while still getting paid. It is also a cost-effective and wise financial decision if freight factoring companies are used for your business.
This is because it is much cheaper if you hire the services of a freight factoring company, rather than maintaining the costs of running a collections department yourself. And if you plan on fully running the collections service yourself, you could save a lot more time by outsourcing that kind of job to a freight factoring company.
A freight factoring business might be just what you need to kickstart the running of your freighting company!