Freight factoring, also known as trucking factoring, is a method of invoice factoring that permits transport companies and truck owner-operators to turn unpaid invoices into immediate money. These invoices are scheduled for payment 30-90 days from the issued date which could hinder business growth or liquid cash to pay workers and gas. These factoring companies guarantee money in two to three business days.

There is no discrimination if the trucking company has just started or it has bad credit, or no credit, invoice trucking would be the solution you need. Most of these truck factoring companies offer services for a small percentage fee of the total invoice payment. These services work well with small to medium-size trucking companies struggling with cash flow or accounts receivable collection matters keeping the business from growing or running proficiently.

The guaranteed money has affected the relationship the trucking company has with the factoring company. There are two kinds of arrangements offered – recourse factoring – this encompasses a contract where the trucking company buys back from the factoring company the invoice if the customer’s commitment is unpaid. The sharing of the risk of an unpaid invoice lowers the associated fees.

For non-recourse factoring, the factoring company undertakes all the responsibility of the invoice collection. The factoring company fees are higher through this process and they get more discriminatory about which invoices they will commit buy. A considerable number of owner-operators and small trucking companies opt for this latter option for it is a worthwhile tradeoff for dependable cash flow.

Many small trucking companies prefer it when the factoring companies work as an extension of their accounts receivable for their direct contact with their customers help manage billings, perform credit checks, they are involved with collections, and communicating with their customers’ accounts payable departments.

Their contact with their clients streamlines the movement of shipping documents, their supporting data, invoice distribution, and carrier statements. All these services are offered at an agreeable fee which is usually a percentage of the invoice payment. Other aspects to look at before considering a freight factoring company are by evaluating factoring company on their understanding of the type of freight hauling and pressures they have experienced, does their rate and advance percentages change based on load stipulations or they stay fixed for the period of the factoring contract, and what would be the criteria for determining creditworthiness of its customers.

Instead of dealing directly with these freight factoring companies, the involvement of a freight broker who offers an accelerated payment program known as Quick Pay would be ideal instead of signing contracts. These freight brokers guarantee payments following a receipt of the shipping papers within a well-known number of business days in exchange for a fraction of the invoice bill charge. Large brokerage operations, an option on the Quick Pay program, have freight brokers who offer cash advances and other service discounts counterbalancing the out-of-pocket expenditures.

Quick Pay is a wise option since the shipped load and payments originate from the same source and there are no contracts or minimum volume load for the contract is between the broker and the factoring company. Flexibility is achieved in choosing options for Quick Pay. Many of the loads approved by freight brokers are accessible in Quick Pay once the load is ready to be dispatched. Quick Pay is like cash flow deprived of restrictions and penalties or additional services that direct association between a factor and a trucking company can provide. However great this service could be, these freight brokers want to be paid on time to facilitate service.