The Importance Of Transportation Factoring In Our Digital Age

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Contrary to the belief of some, transportation factoring has more relevance than ever in the Internet age. The advent of e-commerce means that customers are able to order goods quicker, even though payment policies haven’t really changed. Thanks to on-demand ordering services such as Amazon Prime, more and more deliveries need to happen right away. However, accounts payable departments (especially those of large chains) are not speeding up to match this increased need, meaning that carriers have to deliver goods quicker while still waiting one or two or three months to receive payment on delivered goods.

If you’re the owner of a trucking company of any size, you know that you often have to wait on payment for work you’ve already done, which can set up a wall of cash flow problems. You also know that the bigger the haul and the bigger the customer you’re delivering for, the longer the wait. If you’re looking for tips and advice for freight factoring it pays to remember that in order to succeed as a carrier working in today’s digital world, you need to find alternatives to simply waiting around for sluggish payment to come through. This is why so many companies are turning to transportation factoring to help manage cash flow.

 

What is transportation factoring?

Transportation factoring, also known as freight factoring, is a process by which a trucking company can sell its unpaid invoices to a third-party factoring company for a small fee in exchange for immediate payment. Typically, a factoring company will purchase the invoices for up to 97% of the initial value (less a nominal factoring fee that differs from plan to plan). The factor will usually keep the other 3% in reserve, and once they’ve collected on the invoice on the carrier’s behalf, they’ll refund the reserve amount.

 

Why it’s so popular

Because you’re selling invoices — rather than applying for a loan — you can expect high approval rates, especially since you are largely approved because of the credit-worthiness of your customers. The more credit worthy the companies you service, the better your chances of being approved.

Some transportation factoring companies, such as Accutrac Capital also offer:

  • sizeable fuel discounts throughout North America
  • help identifying the credit worthiness of present or potential customers to better mitigate risk
  • generous credit on fuel expenses

The right factoring company will also offer round-the-clock access to your account online as well as helpful service representatives who understand the trucking business intimately and can help you choose a plan that’s perfect for your particular trucking business. A reputable factoring company’s website will also offer features that allow you to get reports on a prospective customer’s credit standing quickly, helping you make a more informed decision when taking on new work.

In today’s trucking economy, your customers can order deliveries faster than ever before thanks to improvements in mobile technology, but while you as a carrier are expected to make deliveries faster than ever, brokers and shippers will still wait up to three months to pay. Work smarter, not harder, and partner with a factoring company today to keep cash on hand when you need it most.

 

Author: Ryan Yarbrough