These days, it is common for transportation and trucking companies to use freight bill factoring as a part of their financial model. For those who aren’t aware, freight bill factoring involves selling your unpaid invoices to a factoring company for upfront cash.This allowsyou to continue your day to day operations while the factoring company worries about collecting on the outstanding invoice. The initial paperwork process is simple and straightforward and generally only takes 2-5 days for approval. After that, youreceive advance funds on invoices in less than 24 hours.
What is the Process?
First, you complete a delivery as normal, and thenyou simply submit a copy of the freight bill to the transportation factor. According to the experts at Accutrac Capital, the next step is for the factor to verify the invoices in question, and if everything checks out, they will advance you 97% of the total invoice minus a small factoring fee. AR management is easy with Accutrac invoice factoring because their specialists work with your customers’ AP departments to collect payment for the original invoice.Once the amount is paid in full, your business will then receive the remaining reserve of 3%. There are a number of options to keep in mind when considering factoring:
Flat Fee Factoring
- From 1.59% — an all-in plan that covers you for 90 Days
- A simple, easy to manage option with an easy to calculate one-time cost
Factoring Line of Credit
- Designed for larger fleets and operations
- A flexible line of credit providing maximum value & control for larger truck fleets
- From 0.022% per day, plus a small administrative fee to manage your accounts receivables.
- Only 0.49% for 10 days
- The ideal funding option for carriers with quick paying customers
In order to be approved by a transportation factoring company, you’ll need to complete an application and provide the following documents:
- Articles of Incorporation
- Operating authority
- Proof of insurance
- A current customer list
Don’t Worry about Bad Credit
Don’t let bad credit or past financial difficulties stop you from obtaining the cash flow your company needs to succeed in the transportation industry. Rather than looking at your credit, factoring companies look at the credit scores of your customers, which means that approval is based on their solvency.
Factoring is Not a Loan
Transportation factoring should not be confused with a loan, as it won’t dilute equity. Essentially, freight bill factoring is a cash advance for outstanding invoices. Trying to secure a loan or a line of credit from a bank can be extremely difficult, and is especially tough for start-ups and small companies. Even the largest freight enterprises have trouble securing the funding they need from a bank. Even if you’re approved by the bank, the process is long and you’ll be governed by restrictive covenants that can limit your ability to grow.
Freight bill factoring is the ideal funding solution for growing fleet operations.The more invoices you generate, the more capital becomes available to fuel further growth. Freight factoring services from Accutrac or similar companies can help you spend your valuable time building your business and not chasing clients to pay invoices. Timing is critical in the freight industry,so make the most of your time with the benefits of freight bill factoring.