People who own and operate trucking companies know the importance of having a freight bill paid on time. In fact, it is not only important it is vital to the trucker's success in business. Discovering ways around finding a good paying client that only pays every 30 or 60 days can be a very stressful period. Finding a way to pay for the fuel and manpower to continue operating while waiting for payment is the number one issue that faces most trucking companies. Freight bill factoring has become mainstream in today's trucking industry and offers a solution that can't be found anywhere else.
Freight bill factoring has become wildly popular in the past decade within the trucking industry. The practice of freight invoice financing removes the prolonged waiting period to get paid and has most freight bills paid within a few working days. How it works is that a trucking company will sell their existing freight invoices to the freight factoring company who in return, purchases them from the trucking company and waits for payment. After all, this is their business is to wait for other people's payments while making available the cash from the freight bills as though they were already paid.
Freight bill factoring is very easy to use and simple to understand for both the trucking company who is seeking financial assistance as well as the factoring company. Once a trucking company delivers the load and issues a freight invoice, it is then sold to the freight bill financing company who will issue a percentage of the gross freight invoice total. Usually the freight bill factoring company will issue approximately 90-95% of the total bill and wait for the payment to be collected from the owing company. When the freight invoice financing company receives the funds owing from the freight bill they will issue a second payment of the remaining funds of the bill minus the processing fee.
Freight factoring companies are as individual as the rates that they reflect. Every different rate offered by individual freight invoice financing companies is unique however; they usually fall within the 1.5-3.5% range per 30 days. These figures are of course dependant upon volume and duration of transactions. If transactions surrounding the trucking company's history revolve around a 60-day period, the fee will be a bit higher than the customer working within a 30 day duration period. The clientele of the trucking company is a contributing factor as well because without a solid credit worthy customer, a business is likely to be refused for freight bill financing. Most freight invoice factoring companies offer a fast turnaround as they recognize the importance of available cash flow to an existing business. Factoring lines can be set up in as little as a few days with the exception of those companies who don't have proper documentation to demonstrate creditworthiness of clients, volume and duration of transaction times.