Freight factoring allows freight carriers to maintain a positive cash flow. Maintaining a positive cash flow is a must for any business enterprise, especially those that deal in transporting freight. When a freight carrier utilizes freight factoring they can keep buying the fuel they need and pay the drivers their salaries. Freight factoring also enables the small carrier to continue paying their own bills.
Factoring is a service that most new carriers will need to take advantage of if they hope to continue in business until they get established. With factoring services the new freight carrier can continue to pay their overhead expenses. Sometimes freight carriers have to wait and average of 6 weeks or more for their freight invoices to be paid. Slow paying clients can make it impossible for them to continue paying for their fuel expenses to deliver the next customer’s freight.
The stress of waiting for freight invoices to be paid is eliminated for the carrier. They no longer have to worry about paying fuel expenses and losing drivers because of not being able to pay them. This is because when you utilize the services of a freight factoring company they will buy your account receivable invoices for a percentage of what they are worth. Freight factoring companies will pay as much as 95% of what the carrier’s invoices are worth and you will have the immediate cash flow that you need to continue operations. Freight factoring services will pay for the invoices immediately and then colllect what is owed from the customer.
With non-recourse freight factoring plans you can be paid for your invoices on the day the load is delivered. There are no long term contracts and freight factoring is not a loan that you have to pay the frieght factoring company back. The freight factoring company will handle billing the customer when you sell your invoices and you can move onto delivering freight for the next customer. Freight companies that experience slow paying customers appreciate the services they receive through a freight factoring company and many would not be able to stay in business if it were not for freight factoring.
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