Sell your freight and trucking invoices to get the cash you need immediately, without waiting for payment, giving your trucking business cash flow now. Funding your trucking company by factoring invoices can provide the cash flow you need to run your business in the fast lane.
Applying for transportation financing through Porter Capital gives businesses the cash flow they need to run their business without the hassle of worrying about billing and collections, making sure your drivers get paid instantly. Porter Capital has decades of experience helping fund the trucking industry.
Freight Bill Factoring
Freight bill factoring is when a trucking company sells its outstanding invoices, backed by bills of lading, to a factoring company or financial institution at a discount. In most cases, invoices can be converted into cash or “factored” very quickly, typically within 24-hours.
Freight factoring services are most often used by freight, rail and trucking companies in the transportation industry.
Due to the conflicting payment terms between shippers and carriers, cash flow problems are common in the industry-even for freight companies that routinely turn a profit. The shipper generally demands immediate payment, but the carrier usually does not collect until delivery.
While many business opportunities exist, profit margins can be slim for small and mid-sized trucking and transportation companies due to heavy competition and the lowest bidder often securing the job.
That is why many carriers rely on freight bill factoring to shore up their cash flow. The service allows them to get paid in 24 to 48 hours and requires dramatically less paperwork than a business loan.
How does freight factoring work?
Freight bill funding, or freight bill factoring is a working capital solution that allows a trucking business to monetize outstanding invoices and get paid almost immediately for work already completed. This is achieved by selling invoices to a factoring company.
After buying the invoices, the factor typically advances a large portion and takes out a small discount as payment. Trucking and transportation are amongst the industries that have the highest advance rate.
Factoring can help a freight business:
Some of the world’s largest consumer factoring companies include credit card companies, such as Visa and Mastercard. At the same time, commercial clients are served by specialized freight factoring companies and banks, like us here at Porter Capital!
Factoring relies on your clients’ creditworthiness, making it an ideal option for freight companies just starting out. To extend freight factoring services, factoring companies run a credit check on their clients.
This apprises you of your clients’ risk profile allowing you to make informed decisions about maintaining a business relationship with them.
Which types of businesses qualify for freight bill factoring?
Most trucking and transportation businesses qualify for invoice factoring. Companies that can benefit from freight factoring services include the following: