Why 3PLs, Brokers & Carriers Need Flexible Freight Factoring

Flexible freight factoring and payment for freight finance can provide shippers with the opportunity to stay ahead of costs and carriers never have to wait long to get paid. Combining an audit with analysis and freight optimization tools significantly boosts the savings potential. Freight transportation is a massive spend category. Ensuring freight bill accuracy and keeping cash flow intact—an essential business need—is critical in today’s freight market for 3PLs, freight brokers, and carriers alike. Freight factoring companies that offer flexible factoring terms and are easy to work with can provide the necessary capital to continue to keep all freight parties’ prepared to keep freight moving without business interruption. Learn why in this article.

What is Flexible Freight Payment and Freight Factoring?

Freight factoring occurs when a delivery is made as scheduled. However, rather than waiting for payment, the freight company or owner/operator transfers or sells the invoice to a third-party freight factoring company, which then pays the invoice immediately, minus a nominal service charge. T. The freight company will continue to focus on other tasks in the business while the freight factoring company handles the invoice and does the waiting for payment in full from the shipper or supplier. Partnering with a freight payment company can also provide more benefits to maximize profit margins and avoid the risk of shippers taking longer than usual to pay.

3PLs, Brokers, and Carriers All Traditionally Rely on Shippers for Payment

Freight factoring companies help shippers and carriers by giving them the majority, if not all, of the funds needed for their company. Shippers may experience a delay in payment or get behind with accounting and invoices, but it directly affects the carrier. Carriers usually have to pay up-front costs like fuel or repairs, which can cause issues if the payment is not received on time. In explaining the billing system, Supply Chain Dive states, “So carriers may not be due for a freight billing revolution any time soon, but that does not mean they shouldn’t embrace it when possible. Companies pay significant amounts of money or expend valuable resources for invoice audits which, as Supply Chain 24/7 suggests, can be better managed by both shippers and carriers upfront.” Using a digital freight forwarding platform can provide shippers with an upfront efficient way to pay carriers and brokers rather than make the businesses wait for payment. Having the option for shippers to pay upfront and carriers to receive the payment allows for companies to exponentially grow without setbacks.

Additional Reasons to Leverage Flexible Freight Payment Solutions

Freight payment, also called freight audit and compensation, refers to specialized systems and processes that manage high volumes of freight invoices and deliver deep business intelligence about freight costs. Companies can help carriers find more capacity while ensuring shippers can make the proper payment on time.  Freight factoring can help any business experience the following benefits:

  • Flexible payment solutions that reduce the risk of carriers not getting paid and still allows shippers to secure the capacity.
  • Immediate payment which can help prevent the carrier from rejecting the load based on the shippers’ ability to pay.
  • Cost structures that are built with flexibility in mind to meet the needs of shippers, carriers, and the ultimate customer.
  • Flexible cancellation policies, provided the software vendor makes that clear. 
  • Easier financing than going through a bank, by o. By obtaining a next-day payment and immediate processing, shippers and carriers can receive the payment almost immediately.

For companies to achieve growth and scalability, the best decision is to partner with freight payment services that can strengthen specific businesses and provide tools to increase efficiency. For freight spending and payment, putting a freight payment solution in place is necessary to effectively manage costs and ensure on-time payments.

Take Advantage of Fast, Easier Freight Factoring and Payment by Signing up for ComFreight Now

Freight factoring can provide a higher level of business intelligence and ​can integrate data from multiple sources, delivering much more valuable information to be used for decision-making and process improvement. To see the benefits of an easier way to handle payments, request a demo to see how the HaulPay platform works.

5 Tips to Maximize 3PL & Freight Broker Revenue & Profit Margins

As a freight broker or 3PL, few topics carry the weight of freight finance and freight broker margins. Freight finance is simply the process of getting paid for loads moved sooner than the typical shipper payment schedule. Unfortunately, there are very real risks that your shippers may take longer than usual to submit payment, payment may not be in full, and other issues could arise. That’s why more 3PLs and brokers are turning to companies who can aid brokers & 3PLs with cash flow that can alleviate these concerns. Moreover, as explained by Truckstop.com, “The fastest way to increase gross margins is to work more efficiently. Using load boards, analyzing rates, and posting loads for preferred carriers all increase the efficiency of that process. More efficient freight brokers earn more.” And while that’s valuable advice, there are five core considerations to take that will help maximize your profit margins on every load. 

1. Diversify Your Lane and Modal Mix to Improve Your Freight Broker Profit Margin

The first consideration is all about branching out beyond your typical shipper-client profile. Diversity in your lanes and modal mix will help reduce your direct transportation costs. After all, knowing when to outsource is part of the hallmark of a great broker or 3PL. Knowing when to consolidate, switch freight to another mode, and how to eliminate all backhauls—all while continuously optimizing every leg of shipping—creates diversity that will go a long way toward increasing freight broker profits. 

2. Accept Tendered Load With Rates Based on Current Market Dynamics

The next consideration is to think about current market dynamics. When a shipper tenders a load to your company, it’s easy to accept it immediately, especially if the load is easiest to pick up and transport. However, this is a carrier market, and in some areas, the pendulum is more closely aligned to shippers. Without considering the unique market dynamics in play in each O/D pair, it’s difficult to understand your true 3PL and freight broker margins.

3. Target Lanes With High-Profitable Needs

The next core aspect of increasing profitability is the simplest: target lanes with high-profitable needs. Now, this is more complex than simply targeting lanes with the least capacity. After all, not every move is as profitable as others, especially when dealing with high-value cargo. Instead, consider the full picture, recognizing the ease of loading/unloading, the risk of dwell time, whether the load will result in added emissions (such as increased cooling), and other factors. This will help to maximize your profitability by keeping an eye on the indirect costs associated with each move. 

4. Eliminate Empty Backhauls

Another consideration is to eliminate all empty backhauls. With added pressure and demand for more capacity, there’s no reason to face empty backhauls. Some shipper, somewhere, has a need for your capacity, and rather than traveling empty, try to find loads within a given radius that fall within your predefined parameters for accepting a tender. 

5. Know When to Say “No”

The last consideration is hardest for most 3PLs and brokers to apply, but it has grown easier as the market has been favorable for carriers for nearly 18 months. 3PLs and brokerages need to know when to say “no.” Offering more money for a load is great, but what’s the real cost if you have to travel empty? Have you thought about the potential emissions’ impact? Do your drivers really feel comfortable driving extra without any real meaningful impact to profitability? Now look at that last question, and think about this. Most carriers have five or fewer trucks, so empty miles are likely to amount to lost revenue for the driver, not just a carrier in the realm of logistics. It’s that reality that forces 3PLs and brokerages to think about whether it’s really worth the effort and time for a less-profitable load when there’s another option that may be better for freight broker margins.

Maximize Brokerage and 3PL Profit Margins With Better, More Efficient Freight Finance Options Through HaulPay

Freight finance is always a delicate subject. Without the right freight finance tools at your disposal, maintaining a positive cash flow while moving freight will be difficult at best. And your troubles will carry over into increased hostility or unwillingness to move freight for shippers that routinely take too long to complete payments. However, taking these considerations now will help your company, whether a freight broker or 3PL, maintain better working capital, get the funds needed for today, and seek out more profitable loads.  Improve shipping execution by leveraging the above tips and putting the power of ComFreight’s HaulPay to work. Request a demo to see how the HaulPay platform works.

5 Suggestions to Improve Freight Sales & Grow a Freight Broker Business

Creating new value as a freight broker can be challenging, but during times of disruption, the opportunity for freight sales to secure new shipper-clients and expand carrier negotiations is vast. With all the interest in adding high-value shipper-clients, it’s important to know a few suggestions that will help improve freight sales and grow the brokerage. Let’s take a closer look at these five suggestions and how they help your company unlock limitless scalability through combined, collaborative freight finance, including transportation factoring.

1. Choose the Right CRM Software

The first suggestion and how to grow your freight broker business is the simplest; your organization needs to choose the right customer relationship management (CRM) software. The right CRM software is essential to ensuring your communications are intact and follow a natural progression through the sales funnel.

2. Get Real-Time Insights Into Freight Market Volatility

Another critical step in trying to figure out the best way how to grow a freight brokerage business rests with data. Brokerages need real-time data and analytics insights into freight market volatility. This allows brokerages to see where shippers and carriers alike are struggling the most. As a result, they will be better positioned to come into the relationship and be able to add value on both a shipper-and carrier-side. Furthermore, real-time data insights into freight market volatility naturally implies that brokers will be able to secure capacity at competitive rates without over or undervaluing transportation.

3. Centralize Communications With Your Team and Prospects

It is easy to assume that centralizing communications with your team and prospects should naturally fall under CRM software. However, in today’s world, centralized communications can be much more than meets the eye. For instance, the various transportation management systems (TMS) used by carriers and shippers need a unifying characteristic, such as a freight broker software that offers integrated freight payment management. By unifying the data streams and keeping communications in context and real-time, brokerages will be better equipped to improve freight sales and grow the business.

4. Take Advantage of Network Connections at Software Providers, and Train Your Team

Training is also vital to increasing sales and promoting growth in your brokerage. As reported by Supply Chain Game Changer, “Although industry experience is one staple of being a successful broker, those who are able to maintain a profitable business allocate some of their time toward continuing education. Freight broker training schools operate throughout the country as well as online, allowing brokers to gain deeper insights into the business, the industry, and best practices.” Efficient training is also widely available a customer’s resources, including carrier-or shipper-initiated training modules to ensure your team knows how to navigate differences between TMS platforms and even load boards. It is the combined network connections of services providers that can help you train your team and keep them ready for the next wave of disruption.

5. Streamline Freight Financing Processes

The final suggestion to improving the freight financing process is easier to imagine with keeping the above issues in mind. Unifies data, centralized communications, and collaboration naturally imply a need for streamlined freight financing. That is possible through an them that it, advanced program that can compile transportation and load data to effectively reduce the payment clock for carriers. After all, carriers that are paid in a timely manner are more likely to accept tenders from both brokers and shippers. Furthermore, improved freight financing will naturally lead to cash flow improvements within the brokerage, less confusion among carriers regarding pay dates, and an overarching ability to do more with less by reducing cash flow issues.

Grow Your Freight Broker Business With HaulPay in Your Tech Stack

There are many ways to grow your freight business, and technology is swooping in to save the day. It’s time to put the power of technology to work as you look for ways how to grow a freight brokerage business and increase freight sales. Reach more shipping prospects by eliminating the hassle of lengthy freight payment processes. Request a demo to see how the HaulPay platform works.

How to Handle Freight Finance and Logistics Through Hurricane Season

It’s that time of year again—hurricane season. And for trucking companies, shippers and brokers, it’s also time to balance the run-up to peak with the other disruptions of reality. Meanwhile, the industry is dealing with the fallout from Hurricane Ida’s intense assault on Louisiana. As reported by NBC News, the state’s governor, John Bel Edwards, described the storm as “one of the strongest storms to make landfall here in modern times.” With Hurricane Katrina’s 16th anniversary coming the same day as Hurricane Ida made landfall, this is a time of great concern. Everyone is waiting to see what happens as the devastation of that event continues unfolding in the weeks to come. And freight management parties need to know a few things about what hurricane season means for logistics, how to handle the surge for affected areas, and why freight factoring or other finance options are crucial to success.

Logistics, Hurricane Season, and the Construction Industry Come Together to Add Complexity

Construction trucking, i.e., flatbed rates, always increase in tandem with hurricane season in logistics. That’s reality. However, the past hurricane seasons have led to one inevitable outcome—a greater chance for disruption and increased demand for faster, accurate, and efficient freight finance. But why is freight finance so crucial during times of upheaval like hurricane season? It comes from the need to recognize that nothing is as it seems. And the irony of this lies in how we apply data from the past to plan for the next storm and its aftermath. 

Historical and real-time data insights can help shippers understand the surge in demand. The same can help carriers and trucking companies recognize when to accept tenders with O/D pairs nearest affected areas. Disaster relief loans from FEMA might be available to Louisiana-based carriers to fund operations and recovery. Still, carriers need to move more freight than what those loans might cover. As a result, it comes down to ensuring timely payment, even when shippers begin extending payment terms following such an event’s landfall.

The Things to Know About Freight Finance and Logistics During Hurricane Season

When a natural disaster strikes, carrier rates for loads with origin or destination at the affected area will inevitably increase. Such devastation creates a massive demand for trucking and undermines the efficiency of typical freight finance processes.

For instance, some parishes in the affected area have reported a complete lack of infrastructure, including no cellular service and zero options for getting food. Even worse, freight finance resources at the site may be limited and leave your company to the whims of shippers that are already struggling to get the doors open to their facilities. 

It’s a grim reality for those faced with cleanup, but it will result in highly lucrative loads for the area. As such, here are the things to know about it before accepting any request despite the urgency:

  1. Do not take freight on a shipper’s or customer’s word. This is perhaps the most challenging issue to recognize. Carriers want to make money, and if a shipper is willing to pay, it’s a high-profitability opportunity. However, it can easily lead to lost revenue and even result in a shipper going back on the contract terms. That’s why it’s critical to get everything in writing, from the surcharges through the delivery expectations. If it isn’t in writing, it’s best to assume it isn’t reality.
  2. Recognize that extended dwell times will happen. Another factor that will affect your profitability is dwell time. During hurricane aftermath transport, dwell times grow exponentially. They’re even longer if warehouses or shippers have experienced extreme damage. These extended times mean you should build in additional detention charges well before accepting a load. 
  3. Carefully consider the requirements for each load. Freight comes with special handling and equipment needs, especially when viewing construction and food shipments. What good is it to get a food supply to an area without electricity if it requires refrigeration? Take these issues into consideration and recognize that you might need to go with more reefer loads than those usually shipped without such concerns. 
  4. Plan on waiting in traffic. Dwell time might lead to delays on side streets and traffic issues, but those problems aside, there will still be traffic delays. Debris and floodwaters may block the optimum routes, and your mileage can quickly soar if a detour adds 50 more miles and extends your costs. Plan on waiting in traffic and build those delays into your costs, using them to ensure profitable freight finance throughout the whole journey to and from affected areas.
  5. Do not plan to get paid earlier by a shipper. There’s a perception that urgency equals urgency of pay. That’s the farthest thing from reality. Shippers need to return to operations, not focus on administrative issues, like paying carriers. Your invoice payment terms, typically 30-day to 90-day standards, will increase by a month or more. The duration of recovery may also extend freight payment on outstanding invoices as well. Therefore, you may need to take other means of recourse to get paid. For example, if your company typically waits on shippers to pay at a 90-day interval, hurricane-induced demand may make freight factoring more appealing. Additionally, it is worth considering the differences between recourse versus non-recourse freight factoring. In other words, it’s imperative to assume that the shipper may not pay in the end, and if your company is on the hook for paying back advanced funds to the factoring service provider, your cost control goes out the window. Always ensure you know what might happen if the shipper never pays and who will carry the burden of paying in the end. 
  1. Remember the surcharges brokers may assess. Even if your company works with brokerages to find loads, remember that the rates offered may not yet include brokerage disaster surcharges and fees. Brokers get paid their base rate plus an urgent rate for freight heading into and out of affected areas. Always look for these surcharges and determine how they affect the true profitability per load. 
  2. Be ready for manual logs and limited connectivity. This issue is especially prudent for Louisiana areas without cellular service right now. Without an active internet connection, your ELD may not update properly. As such, trucking companies may need to rely on paper logs to handle things. That’s also true if water or other possible damage occurs to your rig and leads to a failure of the ELD.
  3. Take advantage of external resources where possible. Many things can and do go wrong in the aftermath of a major storm’s landfall. While it’s an opportunity to increase profitability, it’s important to remember that you are not alone and that options exist. These options include leveraging external resources, like mainstream freight data sources, such as DAT and JOC, to help your team understand what’s happening. Additionally, other freight finance solutions can still function throughout the disruptions caused by storms, provided you know where to look. 
  4. Know when to look for other loads too. It’s easy to want to help and provide transportation to areas affected by natural disasters like hurricanes, but other moves might prove more lucrative in a highly volatile market. It all depends on where your fleet is located right now and whether you can justify the costs of getting freight delivered on time and in full. With that in mind, consider checking other load boards, like ComFreight, to review moves that might be more lucrative without running the risks associated with transport to hurricane-affected areas. 

Enhance Freight Finance Efforts to Help With Recovery by Leveraging the Expertise of ComFreight and the Power of HaulPay

The Atlantic hurricane season runs through November 30 annually, and this coming winter is anticipated to see increased precipitation due to the mounting risk of La Nina. 

It’s going to be more critical than ever to take weather-related disruptions into account when reviewing available loads, and part of the risk can be mitigated by following the steps above and putting a dedicated freight finance solution like HaulPay to work. Request a demo to see how your team can still get paid on time, using HaulPay, despite the disruptions caused by this and future hurricanes.

Brokers & Owner Operator Truck Carriers Should Have Freight Finance Options for Credit, But Fewer Fees

Learning the details of owner-operator financing, ranging from a freight broker credit check through managing the freight finance to free working capital to make more moves can be troublesome at best. In today’s age, the push for faster service and lower costs is absolute. As reported by John D. Schulz of Logistics Management, strong truckload roads coupled with an increase in GDP are creating year-over-year growth opportunities for brokers and owner-operator truck carriers. Unfortunately, there are only so many trailers and trucks available, and any delay in payment for services increases the risk to these companies. Ultimately, brokers and owner-operators need a better approach to freight finance. Let’s take a look at the problem of high costs for credit, why an expert is essential to navigating the industry, how a line of credit (LOC) can help, and a few other points of consideration.

The Problem: Fees for Freight Finance Can Be Exorbitant

The simple reality comes from the issue of an owner-operator financing bad credit among its brokers or shippers. If the cargo owner doesn’t pay, the trucking company loses profitability, and even if everything is paid on time, there are still the added costs of processing. In the worst-case scenario, the trucking company may need to pursue legal options for obtaining payment, and that’s an adverse effect because it digs into the working capital of the transporter. Additionally, the fees for financing can be extreme and vary widely based on the nuances within each contract. There is clearly profitability within offering owner-operator truck financing, indicated by a growing CAGR for this industrial sector, noted in a past blog. However, there’s also another reality. Larger carriers have access to more resources to keep their freight financing costs under control, but others, including those of mid-size stature, may simply have limited resources. In a highly volatile market, even the largest carriers may experience cash flow disruptions due to the unrelenting demand on the industry. As a result, it comes down to knowing what to expect and working with the right services for finance.

Freight Financiers Must Have Expertise in the Trucking Industry

Freight financiers are a dime a dozen, but they are not created equally. These companies could charge up to 30% or more for simply offering an advance on an expected payment. Moreover and without experience in trucking, these companies cannot conceivably maintain a financing presence. In other words, freight financing depends on knowing the details of all shipments, contracts and ways to ensure shippers pay on time and in full. By the same measure, the value of a broker credit check conducted by these companies can help your team identify shippers or brokers that have a history of delayed payments. How is that valuable?

Well, the creditworthiness helps your team plan for when a realistic payment will arrive. That’s essential to maintaining a positive cash flow and leveraging commercial truck financing for owner-operators.

LOC for Commercial Truck Financing for Owner Operators

Another option in freight financing is a line of credit. This is a resource that doesn’t rely solely on invoiced transportation but rather a combination of expected payments with the ability to use funds for virtually any need. This is an excellent way to augment financial stability through periods of uncertainty, such as when your competitors undercut your rates and when the market is shipper-favorable. 

Building Credit Starts With Short-Term Funding

The best way to build credit with owner-operators is to work with shippers and brokers that have a strong history of paying on time and in full. However, building credit can also begin with short-term funding solutions that consider the uniqueness of each contract and help your team maintain transportation needs through the immediate future. This ensures you are able to recoup your expenses while making a sizable profit with a faster payment window. Of course, that also depends on reviewing the fine print listed in each contract to ensure your team invoices all shipments properly. After all, an error on your end could lead to lost opportunities for profitability. And when things go awry, short-term funding can help you get over the hump.

Choose HaulPay to Finance Freight With Less Risk and Greater ROI

Today’s transportation industry is a living, complex organism, and like every animal on the planet, it requires regular energy—i.e., working capital in this metaphor—to live on and thrive. There are always going to be companies that have a poor credit rating and those that might put your livelihood at risk. However, you can offload those risks by choosing the right partner for your freight financing needs. ComFreight is that partner, and their solution, HaulPay, is exactly what you need. Request a demo to see how the HaulPay platform works. Learn more information on how to build credit as a freight broker or how commercial trucking financing for owner-operators works.

How Much Do Freight Factoring Companies Charge

Freight factoring is a specialized form of freight financing or financial factoring that seeks to get trucking companies paid for services before shippers and brokers pay the actual invoice. Finance factoring, including truck or freight factoring, is expected to grow at a compounded annual growth rate (CAGR) of 8.4% through 2028, according to Grand View Research. This is evidence that companies need more substantial cash flows and a shorter payment clock. However, shippers and brokers do not always have their financial systems in place to offer those advantages. That’s why more trucking companies are turning to freight factoring services to get paid faster and use those funds for working capital that supports day-to-day operations. Let’s take a closer look at how invoice factoring works, what fees might apply, and the benefits of factoring.

What Does Freight Factoring Mean and How Invoice Factoring Works

Freight or transportation factoring is a process by which a freight factoring service provider advances the amount of an invoice and keeps a portion as a reserve. Factoring is essentially an upfront loan toward the invoice. The remaining balance is given to the trucking company later after all fees, costs, and other expenses are considered and when the invoice is paid. However, not all freight factoring companies offer the same rates. That’s why knowing how much freight factoring companies charge can be difficult at best. 

There are also two primary types of factoring to consider:

  • Non-recourse factoring protects the trucking business if the broker or shipper doesn’t pay at all. 
  • Recourse factoring puts the trucking company as the responsible party if the shipper or broker doesn’t pay. 

Both forms of factoring may be used depending on the number of invoices and their total value. Regardless, the whole point of truck factoring rates is to give trucking companies a set expectation for payment within a few days or mere hours of delivering an order. 

Other Fees Might Come Into Play

Freight bill factoring rates are highly subjective and depend on the value of the invoice, the freight, and the value placed on the reliability of the shipper or broker. That’s also known as assessing the credit risk of the shipper and broker, and since the freight factoring provider carries the risk, added fees might come into play. These include added collection efforts and potential legal ramifications against shippers and brokers that do not pay by the invoice due date.

Other possible fees include a setup fee, monthly service fee, or even fees associated with recourse factoring. It all depends on what the agreement defines. 

Truck Factoring Rates Might Vary

In addition to specific fees, different trucking factoring rates may apply as well. The rates are designed to offer the most reliable and realistic expectation for payment from a shipper or broker. The rates also depend on the trucking companies’ costs and terms set forth in the agreement. Additionally, trucking factoring rates can be more complex when considering different stops and loads, such as a trucking company consolidating multiple LTL shipments into FT. Other possible influences that could affect rates include delivery days, zones, special equipment costs, and more. Again, this is where asking how much do freight factoring companies charge will become vital in setting expectations upon signing an agreement with set freight payment terms and choosing a factoring servicer. 

Benefits of a Freight Factoring Company Partnerships

Freight factoring offers significant benefits to trucking companies, but many still get confused over how much freight factoring companies might charge. Let’s consider the top benefits of working with a factoring service and how it can alleviate cash flow struggles for trucking companies. 

  • Immediate access to working capital on the same day — in other words, a shorter payment timeframe.
  • Offering higher advances than traditional bank accounting options.
  • Different agreement types to suit almost any shipment.
  • Funding available regardless of size. 
  • Back-office support to handle unexpected issues. 
  • Improved budgeting for future transportation needs.

Know Freight Carrier Payment Terms and Factoring Rates When Choosing a Company

For freight carrier payment management, maintaining a solid working capital reserve can be difficult. That’s true even in times of booming, carrier-strengthened markets. However, not all carriers or trucking companies can afford to wait for weeks or months to get paid on their invoices. Enter the truck factoring companies that have the capital, experience, and resources to save the day. Most importantly, freight factoring companies are experts in contractual language and keep your business’s fiscal health intact. Request a demo to see how the HaulPay platform works to take advantage of our unique freight factoring service, HaulPay.

What Is a Freight Factoring Company & What’s Its Role in Freight Finance?

Finding the right freight factoring company can prove challenging, especially for smaller fleets. Freight factoring services can help with processes associated with trying to improve cash flow or mitigating financial risks that threaten the business. As billing for the freight industry becomes increasingly frustrating, many fleets and owner-operator carriers look to freight factoring for resolutions. 

The drive to remain competitive is always present but has reached new heights, thanks to the overwhelming increase in online ordering and the propagation of ecommerce. In addition to e-commerce, the number of avenues for ordering — or omnichannel ordering — continues to drive this need. Companies must also assess various other factors that are influencing the business, including the credit risks of a commercial shipping company. Hiring a freight factoring company can mitigate these risks and many others for carriers. 

What Does a Freight Factoring Company Do?

Many carriers and fleets do not know what to do when invoices become past due, rates continue to surge because of the pandemic and peak season, or they are faced with limited capacity issues. Factoring companies are dedicated to helping carriers navigate these difficult situations. To begin working with a freight factoring company, everything starts with a credit check and a commercial invoice

Freight factoring businesses verify the credit of a shipper or carrier, and then they front the cash for the client so that they do not need to wait the typical 30-90 days for an invoice to be paid. This keeps cash flowing for those carriers or shippers, and in return, the company takes between 1% and 5%. Essentially, it is a win-win scenario. With the market trending upward, keeping payments flowing will be imperative for this season. 

How a Freight Factoring Company Helps Shippers Find Capacity

To find more hauling contracts for carriers and more capacity for shippers requires expanding their network. Sure, shippers can search the databases, but that takes time they may not have. Freight factoring services have already consolidated the information and can help ease the stress of locating freight capacity in the following ways: 

  • Digitizing systems help centralize data. These services keep a database of their own, leaving shippers to do what matters most: keep their customers happy. 
  • Facilitating on-time payments, which will help prevent load rejection. At times carriers can reject loads based on a shipper’s ability to pay on time. Preventing that begins with finding the best freight factoring company.  
  • Providing services that give shippers the funds they need when they need them. Shippers can find themselves needing capacity but without the funds to secure it. Hiring a freight factoring business provides that freedom while offering a steady payment plan. 
  • Allowing shippers to see side-by-side rate comparisons and availability in real time. Some shippers need to see their options because they may only need a partial or LTL. Knowing where they can move their freight and their rates in real-time help save on costs in the long-term by pairing them with the suitable carrier for their load. 

The Role of Factoring in Shortening the Payment Clock for Carriers

Like any worker in any industry, carriers would prefer to get paid sooner rather than later. The freight payment clock starts to tick the moment a carrier accepts a load. Although carriers need the payment to continue their businesses, sometimes shippers cannot provide payment until 30-90 days later. This seems like a short time, but consider the costs associated with freight transport do not stop while awaiting payment. According to Logistics Management, freight payment as a whole is in need of a major overhaul. From providing an invaluable service to using the services to prevent fraud, the role of factoring eliminates a lot of “what-if’s”. An overhaul of freight payment has been on the horizon, and many experts agree the most successful leaders in the industry embrace technology, states Supply Chain Dive. For them and others in the industry, driving down external costs may lie within freight payment. 

Ways to Improve Factoring Through Digital Integration of Systems 

For other ways to increase your hauling income and improvements for the supply chain industry, experts look to digital system integrations. The top freight factoring companies use a variety of components that look to improve system processes from back-office tasks to provide more cash flow to carriers and shippers. These factors look like: 

1. Factoring Reduces the Delays Carriers Experience in Getting Paid. Freight factoring companies help shippers and carriers by giving them the majority, if not all, of the funds needed for their company. Shippers may experience a delay in freight payment or may just get behind with their accounting, but it directly affects the carrier. Carriers often must pay their up-front costs like fuel or repairs, leaving them in the red if they do not receive payment in time. 

2. Working With a Digital System Eliminates Confusion in Payment Processing. A digital, centralized software platform will eliminate confusion. User-friendly application platforms help users pay their installments at the touch of a button. Most technology now has smartphone capabilities, which means everyone can use them as needed. This software also automates specific invoicing or paperwork, eliminating the hassle of filling it out manually. 

3. Streamlined Document Management Allows for Faster Processing. Automating these processes also streamlines document management. Collaborative technology takes this software and allows users to process their items quicker by providing a centralized system to access documents. 

4. Improved Service and Detail-Oriented Systems Lead to Fewer Complaints and Delays. Without the assistance of human error, digitized systems within the freight factoring company community help improve overall service. These systems are created with details in mind, which means they catch issues before they escalate. This means less delay and more happy carriers, shippers, and customers. 

5. Next-Day Payment Processing Improves Working Capital to Help Carriers Stay Operational. For many carriers, faster is better. Keeping cash flowing for smaller fleets or owner-operators means keeping them on the roads. This gives way to more capacity for shippers. All in all, next-day payment processing keeps everyone operational faster.

6. Integration Further Allows for Better Reporting and Control Over Freight Spend, Whether That’s a Shippers Total Spend or a Carrier’s Overhead Costs. Cost reduction is the ultimate goal for shippers and carriers. Keeping data at hand and continuous freight auditing will lower costs for both parties. 

Boost Finance in Your Network by Becoming a HaulPay User.

Shippers, carriers, and the ultimate customer all benefit when the right network comes to bat. Boosting finance has never been easier. By obtaining next-day payment and immediate processing, carriers and shippers receive the funds they need almost immediately. This keeps carriers on the road and shippers demanding capacity, everyone wins. 

To experience the benefits and achieve overall business growth by using a freight factoring company, request a demo to see how the HaulPay platform works.

What is Freight or Transportation Factoring?

Freight factoring, or transportation factoring, is a financial service that will financially benefit the cash flow for the business by cutting out the waiting period for payment. This will allow freight companies to perform business as usual while the freight factoring company waits instead. And by capturing data, it’s easier and faster to get payment and leverage better working capital. This includes more traditional means of freight payment too. Nearly every freight bill company can process invoices accurately and efficiently, but experts and industry officials contend that even more streamlining comes from examining how to enhance working capital while providing carriers timely, predictable payments,”  according to an article in Logistics Management. With more time to focus on higher priorities, owners can turn their attention to finding more hauling contracts and gaining more customers. Taking freight payment data analysis into consideration when deciding on freight factoring will allow for a knowledgeable, more informed decision to accelerate company growth. This will allow for oversight of the advancements freight factoring can have on any business.

Defining Freight Factoring

A more straightforward way to explain what is factoring in the freight trucking industry is picking up the goods from one location, delivering them to the next, and being paid for the service by the shipper or broker. The profit is the amount paid, minus costs for delivery for the cargo; usually, this will be paid an average of 30-90 days after. However, with freight factoring, when selling the invoice for a load that has been hauled, rather than waiting to be paid, cash will be received immediately. Freight factoring services and following up on trends that are transforming the trade will allow for benefits and advancements to be made throughout the company. For some freight companies, predominantly privately owned, this will highly benefit the weekly or monthly budget. Instead of waiting on payment, an invoice can be transferred or “sold” for the job to a third-party company. By buying the invoice for slightly less, it will make up for it by being paid immediately.

transportation factoring

Why Would a Company Choose to Use Freight Factoring?

When deciding whether or not to use freight factoring, try looking at how the business can benefit or hinder the company’s growth. For best transportation factoring, the main goal for most, if not all, interactions is to gain profit at a positive and quick rate and achieve growth throughout the company. For smaller or privately owned businesses, the immediate payment with factoring will benefit weekly or monthly budgets. In other cases, freight factoring can be beneficial if operations are suffering due to any of these reasons:

  • Difficulty achieving overall growth. 
  • Lack of staff or technological capabilities to manage communication and payment collections.
  • An inability to consistently pay vendors on time due to slow-paying customers.
  • Lack of cash flow negatively impacts business growth.
  • Struggling to obtain financing through a bank and risk paying interest rates.
  • Susceptibility to fraud in your trucking business as well as credit risks. 

How Freight Factoring Streamlines Payment Management

Freight factoring can be very beneficial when helping to manage business finances and credit. Getting paid immediately rather than later gives businesses the capital needed to fund both operational and capital expenditures that drive growth. With someone else handling the billing and collecting, the end results will yield increased profits while removing the hassle of an arduous task from back-office personnel. Every year numerous new trucking companies enter the marketplace. Using antiquated avenues to funding —, for example, banking — makes it more challenging to secure financing. 

freight payment management

The main goal for all for-profit companies is just that — to generate as much profit as possible. However, if there are more “payouts” than “pay-ins” on the balance sheet, many companies would turn to bank loans as a solution, which can result in thousands of dollars being spent on interest payments. Freight factoring is a much better alternative; with money in hand, the business can continue as usual. This, in turn, paves the way for more customer acquisitions, which will generate more profits. In other cases, a transportation factoring company can make sure that the broker’s or shipper’s ability to pay will help mitigate credit risks and the greater risk of incurring losses rather than profits. 

The Strong Benefits and Advancements Behind Modern Freight Factoring

The most beneficial impact of freight factoring: same-day pay once the invoice is submitted and processed. This will afford more capital and greater cash flow for the company while enabling staff to focus on making phone calls to collect funds and managing invoices. Trusting freight factoring to foresee the back-office tasks will also heighten the probability of technology advancements. Generating more profits and increasing overall efficiency will help companies to readily embrace options such as cloud-based technologies, artificial intelligence, and machine learning based on big data. Technology advancements can help optimize growth throughout the company or allow for modernization, with one example being customizable digital payments. These advancements provide for more flexibility and processes outside of a physical location, which will be very beneficial as economies continue to slowly emerge from the global pandemic. 

Reap the Rewards of Freight or Transportation Factoring with HaulPay

No matter the size of a company or how much it has grown, there is always room for technology advancements and optimization of processes. Every company strives for the best possible resources to drive company growth and customer acquisition. Freight factoring can provide numerous benefits, such as increased cash flow, overall business growth, and reduced hassle of managing back-office tasks. To experience these benefits and achieve overall business growth, request a demo to see how the HaulPay platform works.

What Do Freight Payment Service Providers Offer & What Are the Benefits?

For companies to grow and scale, adopting freight payment services that strengthen specific business processes is absolutely necessary. The multitude of advantages that technology provides allows parties across the board to benefit in many ways. Not only do these tools amplify efficiency but they also mitigate risk and lower costs.

They Offer Broker, Third-Party, and Carrier Factoring

The best freight payment companies offer broker and third-party factoring at a flat rate through accessible and streamlined technology. Other beneficial services include providing financing for receivables to freight brokers and offering quick pay at various rates to carriers. Another serviceable feature is carrier factoring with no minimums, no reserve, and a low flat rate. This provides carriers with obtainable options when trying to secure the best hauling contracts.

Load Board Integration Payment Management Helps to Keep Freight Moving Without Added Costs

The digital technology that freight payment service providers offer for shippers and brokers keeps freight flowing smoothly and substantially reduces costs. Integrating online load boards (that offer a listing of digital freight options) allows shippers/brokers to post loads and gather bids on freight from the expansive pools of quality options (from other brokers and carriers). Through this service-enhancing method, negotiating rates becomes simplified and instantaneous, including lane matching with real-time alerts when loads and trucks match. The accessibility that these tools provide allows for a shipping company to accurately measure capacity and have access to the best terms possible.

Prepaid vs. Collect Freight Are Other Options for Those With High Uncertainty

Having different options on freight arrangements eases uncertainty. With a prepaid option, the shipper is responsible for shipping charges and ancillary expenses. When using the collect freight option, the receiver covers the freight charges. This is also known as “collect upon arrival,” and includes any additional shipping charges.

Digital Credit and Cost Underwriting Is Useful to Helping Unlock More Value With Limited Resources

In the modern supply chain network, freight payment providers should offer solutions that empower logistics companies to grow. Even if a business has limited resources, unlocking potential opportunities should still be a possibility. Integrating a digital credit and underwriting platform to establish or maintain credit is key for growth and mitigating risk. As further explained by Jack Glenn of FreightWaves, “Not only does credit insurance allow companies to mitigate risks beyond their control and protect against non-payments, that same credit insurance also allows companies to explore growth opportunities with existing customers. Insured companies can sell on open account terms where they may have previously been restrictive or only sold on a secured basis.”

Benefits of Multiple Freight Payment Services

With a wide array of freight payment services and options, companies reap the benefits of convenience. Many manual processes have been replaced with modern technology that enhances business and amplifies efficiency. These accessible options allow organizations to lower costs and scale through automation without a significant amount of money or change. As these tools can be integrated with current systems, no rehauling of the entire system is required. These benefits include:

  • Better cashflow – Streamlined tendering and transactions allow for automated payment collection, for both commercial invoice processes and regular invoice processes.
  • Fewer delays in getting paid – No more confusion or delays on payments that cost the company valuable time and resources.
  • Lower risk – Risk is mitigated and minimized through accurate reporting and invoicing.
  • Increased cost forecasting – Insight and analytics provide companies with a deep understanding of current rates and deals.
  • Improved driver and employee morale – With magnified awareness, optimal deals can be generated resulting in both driver and employee satisfaction.
  • Business reputation gains – Good and fair business creates a reputation that has a ripple effect across the entire market, which leads to more customer acquisition.

Start Reaping the Rewards of Digital Freight Payment Services with HaulPay by ComFreight

In the modern fast-paced transportation market, businesses must do everything they can to stay ahead of the curve. By offering freight payment services that benefit shippers, brokers, and carriers, companies can exponentially grow without the major risk often associated with change. Improving business no longer has to come with overwhelming challenges. Start succeeding. Request a HaulPay demo today.

What Is and What Are the Types of Freight Payment Services & Options

Today more than ever, managing payment reporting and providing logistics excellence within the supply chain is essential for achieving continued growth and profitability. Finding the right mode of transportation can be challenging enough, but securing payments can be equally daunting. Network managers must balance local needs and restrictions with an increasingly global focus on transportation management and various freight payment processes. And with transportation costs increasing around the world, cost controls and guidelines have become more vital than ever for the modern-day transportation network manager. 

What Does Freight Payment Services Mean?

Freight audit and payment are vital services that keep the supply chain functioning smoothly by ensuring payments are made and received for services rendered during shipping. The freight payment process focuses on auditing and paying freight invoices promptly to prevent missed opportunities and payment delays. It also focuses on collecting the data needed to create records and reports that track freight spend, commercial invoices, and logistics payments throughout the supply chain. Global managers aim to standardize practices and collaborate with a worldwide partner to solve  challenges. The key to freight payment services is managing these expenses and overcoming difficulties with invoices and payments as efficiently as possible within the network.

Problems Surrounding Traditional Logistics Payment Processes

One of the most significant challenges associated with freight payment services is cost management. Reducing freight spend and lowering shipping overhead costs is vital for ongoing growth in today’s competitive global market. Any way the freight payment process can improve is critical. According to The Journal of Commerce Online, reducing freight spend can have a tremendous impact on profitability. Consider this: A shipper with $1 billion in revenue could end up paying $50 million to $100 million in freight spend. This same company could end up managing over 40,000 invoices in a single year. All of these costs and expenses can quickly add up and eat into profits. Therefore, freight payment process management is critical to achieving sustained profitability.

Defining the Top Types of Freight Payment Services

Knowing the various freight payment meanings is critical to understanding how they can impact the supply chain network. Developing industry and company-specific freight carrier payment terms can help managers to easily determine the right freight payment services for their unique needs. Some of the more common options include:

Broker or Third-Party Factoring

Freight brokers provide financing and payment reporting on behalf of the company, usually for a flat-rate fee, which enables shippers and carriers to focus on tasks other than invoicing. This is thanks to the use of online dashboards, apps, and innovative software.

Carrier Factoring

This unique option provides services with no minimums, no reserve and a low flat rate. Carriers experience additional peace of mind while securing the best rates with easy-to-follow steps that help to streamline the freight payment processes.

Load Board Integrated Payments

Shippers and brokers use online load boards to post loads and get bids from a vast pool of brokers and carriers. This allows for faster capacity management, easier rate negotiation, and access to the best freight carrier payment terms.

Prepaid Freight

When logistics managers and directors have a general idea of what their freight loads will cost to ship, a prepaid approach may help free up team members and give management one less concern.

Collect Freight 

This option for supply chain payment reporting focuses on the amount of freight that gets transported and presents the shipping rate based on volume, weight, or several shipments made. This method is based on a predetermined base fee.

Digital Credit and Cost Underwriting

Additional fees such as inspections, legal fees, customs and duty fees, and similar operational expenses also need to be considered when managing payments and finding the correct freight carrier payment terms. 

Maximize Profitability Quickly and Easily With the Right Freight Payment Options

From implementing the right freight payment software and processes to choosing from among the many types of freight payment available, it is essential that the freight payment services align with the needs and goals of the transportation service providers implementing them. Get a demo today of HaulPay, a ComFreight product, to see how the platform streamlines freight payment processes.