As an owner-operator, it can be difficult to obtain the working capital necessary to keep your business afloat when you are waiting for longer than a month for payments to process. You could rely on credit, but then you will be forced to pay for high-interest payments. For this reason, owner-operators have turned to freight factoring for help.
Managing Transactions with Freight Factoring Services
When you are working with a freight factoring company, you will sell your invoices to the company for a slightly lower rate. You will then be paid immediately, and the transportation factoring service will profit from the difference.
In other cases, a transportation factoring company pays for the full amount of the invoice but then charges a fee and turns a profit from charging the fee. This will cost your company less than what you would normally pay in interest.
Streamlining the Process
The process is streamlined by the fact that the freight factoring company will receive payments directly from your clients. When a client hires your services, the freight factoring company will perform a credit check to determine if the client qualifies. This protects both you and the freight factoring company from a customer who may not pay for the load.
Approving the Transaction
Sometimes, the customer will be approved in as little as an hour. However, the freight factoring company might need more information, and it could take as long as a day for the customer to be approved.
Submitting the Paperwork
The submission of the paperwork can be streamlined through an online process. Often, the customer can hire you to transport their load entirely online. Once they have been approved and have made a purchase, both you and the transportation factoring company will receive a receipt. Then, you make the delivery, and the customer pays the company.
Qualifying for Freight Factoring Services
You will be more likely to qualify for a freight factoring company and pay lower fees if you have a high invoice volume. You have control over how many days the customer has to pay, and less time to pay will lead to better rates. Working with multiple freight brokers will reduce the risk to both you and the freight factoring company.
When a customer does not pay for an invoice, the freight factoring company is responsible for collecting from the customer. This allows you to avoid expending resources and manpower. Instead, you can focus on your core business.
Contact a professional to learn more about freight factoring.Share