Factoring is simply the purchase of your invoices. The object is to generate instant cash to operate your business.
Carriers factor their freight bills to eliminate the cash flow problem that is inherent in the business because of the time lag between the mailing of the freight bill and receipt of the payment. It is not unusual for this to be 30 or more days and out-of-pocket operating expenses for this period can be substantial. There are many different types of factoring programs, and choosing the correct one for your business is an important decision.
Brokers factor their invoices so they can offer their carriers a "Fast Pay" option. They simply factor the freight bill when they receive carriers paperwork and they can then pay their carriers within 24 hours. This, in turn, makes it easier to find carriers to move loads because it eliminates a worry about getting paid by the broker. It also eliminates the need for the carrier to factor the freight bill.
Here is a summary of how it typically works:
You deliver goods (or services) to your customer.
Your customer accepts delivery and signs a delivery receipt.
You e-mail the invoice and backup documents to the factoring company.
The factoring company advances up to 95% of your invoice.
The factoring company bills your customer.
Your customer pays the invoice amount to The factoring company.
If you would like more information, including pricing information, about factoring please fill out and submit the form shown below.
Here is a sampling of some of the features the service we recommend offers: