The Federal Motor Carrier Safety Administration says that approximately 5.9 commercial motor vehicle drivers operate in the US and nearly 12 million trucks, rail cars, trains and other vessels move goods over the transportation network.
Trucks carry the largest share of freight by value, tons and ton-miles for shipments moving 750 miles or less. Rail is the preferred method for shipments greater than 750 miles. The LTL market is estimated at $35 billion and according to the U.S. Department of Transportation, the value of freight moved is expected to grow from $882 per ton in 2007 to $1,377 per ton in 2040.
When it comes to trucking, money is essential to keep the industry going. Many trucking companies use factoring as a way to get paid sooner for the loads they deliver. With factoring, companies will buy your company’s freight invoices at a discount, which gives your company fast access to money. Factoring companies can help small business and large businesses alike avoid waiting 60, 90 or even 180 days for payments from customers.
Rather than waiting weeks or months to get paid from customers whose loads you carry, truck factoring provides funding or unpaid freight bills. Nearly 60% of invoices are paid late, so having a factoring service buy your unpaid invoices at a discount gives your company money so you won’t fall behind. In fact, factoring companies can help small businesses bridge invoice payment gaps with upfront payments up to 90% of the original invoice.
Here are eight things you should consider when looking at trucking factoring and load factoring companies:
- Approval rate: Working with load factoring companies should be an easy process. If your customers are creditworthy, then most freight factors should be able to approve you. Usually there are no application fees associated with trucking factoring services, so if you’re looking to avoid fees you usually can.
- Fast access to money: Working with transportation factoring companies can get you or your company the cash you need in as quickly as a day. If you or you company has been factoring trucking loads, but haven’t been receiving payment, it’s probably best to find load factoring companies that will get you the cash you need as quickly as possible.
- Good customer service: Whether it’s fast food or trucking factoring companies, good customer service goes a long way. A trucking factoring company with a good reputation and good customer service will add a personal touch to keep things going smooth. An account manager will be able to ease any concerns you have and keep track of your business.
- Factoring: Freight factoring is usually done one of two ways-recourse factoring where you are liable for unpaid invoices or non-recourse factoring where the factor is held liable for the unpaid invoices. A factoring company will be able to discuss the risks and benefits of each type and which one will ultimately work best for your business.
- Services: When it comes to trucking freight companies and freight factoring services, companies could and should offer additional services beyond just freight factoring. These include online access to your account, free credit checks, fuel card programs or rewards programs and assistance with insurance.
- Contracts: Before you or your company agrees to any kind of factoring agreement, know what’s in the contract you’re signing. The last thing you want is to be locked into a year-long agreement with a company that isn’t doing what you need it too. Find one that offers flexible terms and is willing to work with you or your company.
- Fuel: Working in the trucking industry requires a lot of fuel. Some load factoring companies offer fuel advances for truckers; sometimes as much as a 50% cash advance for fuel once a load is picked up. Finding freight factoring companies that offer this helps to ensure you and the truckers in your company have cash on hand to pay for fuel.
- Documents: As previously mentioned, fast cash is essential in the trucking industry. With that in mind, try to find trucking factoring companies that accept a wide variety of documentation for funding. Companies should be able to accept copies, scans and faxes among other things. Having to continuously submit original documentation costs time money and a lot of frustration.