What are the Best Tips for Freight Factoring?

S. Waddell

Freight factoring can be a helpful tool for an independent trucker or trucking company, because it enables them to collect for their services much more quickly than if they waited for the customer to pay them. There are many variables in freight factoring to be seriously considered before committing to this type of service. The most important first step is that truckers must completely understand how the service works and how it will impact their business. They also need to know the fees charged for the service and whether committing one invoice for factoring means the company then has a right to all of the trucker's invoices.

Businesswoman talking on a mobile phone
Businesswoman talking on a mobile phone

Freight factoring is a means for an independent trucker or a trucking company to receive payment immediately for services rendered. They turn their invoices over to a factoring company, which will generally pay them within 24 hours, deducting a small amount from the total invoice as its payment. This amount can be somewhat negotiable and varies from company to company.

The discount rate charged by the freight factoring company is determined partly by the type of payment the trucker agrees to use. In a recourse payment program, the trucker is immediately paid a significant percentage of the total freight bill. The remainder, less the factoring company's fee, is paid to the trucker when the factoring company collects from the customer. With this plan, the trucker assumes responsibility for the customer payment, and he must return his entire payment to the freight factoring company if the customer payment is not received by a set date.

The non-recourse payment program will have a higher fee, because the freight factoring company is the one assuming responsibility for full payment from the customer. The trucker is paid the full amount of the invoice, less the fee. The fee is a fixed rate, unlike the variable fee used for recourse payments. The trucker has no concern about payment from the customer, making it quick and easy for him.

The freight factoring company is going to thoroughly check out both the trucking customer and the customers being invoiced. They will only accept customers that have a reputable service that is in demand. The customers being invoiced must be worthy of credit.

It is important for the trucker to equally check out the factoring company. He needs to fully understand the rate being charged and know that it is a fair amount. The trucker also needs to know if the freight factoring company will require him to turn over all his invoices for factoring or if he can choose the invoices he wants to have factored. He must know the company is dependable and trustworthy and has no hidden fees that will cost him money he wasn't expecting to pay.

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Discussion Comments


I agree with the point of view which explains how freight factoring is helpful as we are the leading provider of factoring services to freight brokers.


Truck factoring gives you advantage of grow your business well in trucking industry without taking loan. I like your article because you mention every important thing in full detail.

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