Top Ways for Freight Carriers to Improve Cash Flow

It takes money to make money in the trucking industry, and freight carriers that do not have a a steady cash flow are finding it difficult to land new customers and drive business growth.  By obtaining the benefits of freight service providers, carriers can worry less about whether they’’ get paid for the load and instead focus more on operational tasks. Looking at shipping costs and the struggles in the supply chain, Supply Chain Dive explains, “Prices have escalated, too, as consumers feel the pinch from escalated shipping costs. According to the Department of Energy, fuel costs were up 37% year-over-year in mid-July, and load-to-truck costs were up more than 70% in the largest category.” Especially with peak season rapidly approaching, now is the time for freight carriers to get ahead of the competition and gain consistent cash flow. Let’s take a closer look at why cash flow is difficult to manage and how companies can improve it through freight factoring. 

Why Cash Flow Is Hard to Manage

Maintaining a consistent cash flow can become exceedingly difficult for freight carriers, due to a significant volume of daily operational expenses and slow-paying customers. The trucking industry continues to face issues with economic stress, managing different freight volumes and rates, maintaining an efficient driver pool, and payment delays from shippers. Cash flow reflects the movement of money into and out of a business; more money going out than coming in results in a negative cash flow. The trucking industry continues to have slow-paying customers, slim margins, and high operating expenses, which makes it difficult to maintain a positive cash flow. To resolve a freight carrier’s capital structure and maximize revenue, the best option is seeking out a logistics expert who can help. 

Due Diligence with Your Customers

Without due diligence, freight carriers face the risk of receiving slow payments, or even no pay at all, especially with new customers. Conduct the proper due diligence and verify the shipper or broker’s ability to pay before accepting the haul. Having an informed outlook of the shipper or broker’s finances and credit standing can avoid many risks. Running a credit check can allow the customer’s history of possible unpaid bills, poor credit, or other exclusionary factors to be taken into consideration. 

Efficiency Is Key For Profitability 

Maximizing equipment utilization allows companies to operate at peak capacity to enhance profits and maintain a positive cash flow. Utilizing digital technologies for freight finances can fix areas where businesses are running below optimal efficiency and analyze areas for change. By leveraging the latest technology, freight factoring specialists can provide an online load board allowing instant access to a new load opportunity. 

How Freight Factoring and Simple Steps Creates Consistent Cash Flow

Optimizing through freight factoring of invoices can bring stability to cash flow with a fast and flexible solution. By factoring in freight bills, trucking companies can keep taking on new loads and stress less about waiting for payment. Working with a freight factoring company can take the stress out of late payments from shippers and focus on running operations. In addition, freight factoring can provide services with the following value-added processes:

  • Automated invoice aggregation and processing. 
  • Streamlined invoice management with digital document management. 
  • Integrated freight finance systems with your TMS. 
  • Tracking the ease of pickups and deliveries, so you know when to award shipper of choice status. 
  • Using analytics to better manage your cash flow too. 

Furthermore, this allows a company to increase cash flow, and continue to pay operating costs such as payroll, fuel, insurance, tires, and maintenance while also seeking out the next load. Factoring enables carriers to have money on hand and continue to focus on building the business and ensuring positive growth.

Maximize Your Cash Flow and Efficiency by Becoming a HaulPay User

Partnering with a freight factoring company can create positive cash flow consistently while using automated technology to improve efficiency. By utilizing factoring, carriers can receive next-day payments from shippers and worry less about credit risks. Get ahead of the competition by requesting a demo of the HaulPay platform  to learn how ComFreight can increase your cash flow!

The Benefits of Freight Bill & Invoice Factoring For Trucking, Brokers, and The Transportation Industry

In the transportation industry, becoming familiar with freight or transportation factoring can provide financial solutions and benefits. With invoice factoring companies for trucking companies can grow and maintain consistent cash flow, obtain funding despite bad or no credit, and drive operational improvements to help the business continue to grow. As freight factoring continues to gain in popularity, Grandview Research states, “The global factoring services market size was valued at USD 3,235.88 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 8.4% from 2021 to 2028. The current growth of the market can be attributed to the increase in open account trade.” As freight factoring continues to carve its niche as a high-value service , why wait to experience the benefits of this fast-growing trend? Rather than missing out on the opportunity to make more money and avoid the slow payment of  invoices from affecting the companies’ growth, work with a partner that can provide a seamless, stress-free experience. 

Defining Freight Bill and Invoice Factoring

Freight bill funding is a working capital solution that can help a trucking business by ensuring prompt payment rather than waiting weeks or months. . This immediate payment will be a game-changer for the weekly or monthly budget, allowing the company to cover expenses without incurring debt. With the best invoice factoring service, innovative technology and a web portal to upload paperwork are available to ensure the factoring company receives everything in a timely manner. For invoice factoring for trucking companies have the option to use non-recourse or recourse factoring. Non-recourse factoring contracts protect the company if the client does not pay the company a higher fee. Recourse factoring is cheaper but does not cover the loss from the debtor. 

Why Truckers Leverage Factoring Services

Even for freight companies that routinely turn a profit, cash flow problems continue to rise due to conflicting payment terms between shippers and carriers. Trucking companies need to have immediate, consistent cash flow, opportunities to obtain funding despite bad credit, and save time and money on operational management. Profit margins can be slim for trucking and transportation companies due to heavy competition and the lowest bidders often securing the jobs. This is why many carriers rely on freight bill factoring to increase the company’s cash flow. The service allows carriers to receive payment in one or two days with significantly  less paperwork than what is required with a business loan. 

Improved Cash Flow, Less Stress, Improved Cash Management and More

Rather than having to wait weeks or even months for payment, invoice factoring companies have same-day or next-day payment options. One of the key benefits of factoring services is that the trucking company will have more funds to pay for fuel, salaries, equipment, repairs, and other expenses without using a credit card or other finance options. Having consistent cash flow ready for immediate use can be beneficial when surprises arise such as fuel prices spiking or emergency truck repairs are needed. Additionally, knowing the payment is secure will take a lot of “what-ifs” out of the day-to-day stress of the company, knowing the payment happens sooner rather than later. To avoid a delay in the business even during fluctuation, factoring trucking receivables can provide the right financing option.

Additional Benefits of Freight Factoring

For any trucking company, it is a constant struggle to manage fuel costs, find responsible drivers for more loads, and maintain sufficient levels of cash flow. Seek out invoice factoring for trucking and learn about the benefits freight factoring can have for their business for just a small fee. Whether the company has a fleet of 50 trucks or is a small business, freight payment service providers can provide the money quickly every time. In addition to consistent cash flow and less stress, the best invoice factoring service  provides other benefits that include:

  • The ability to pay out expenses and take on more loads than the company could before. Increased cash flow provides more opportunities to invest in a new truck and pay additional drivers to pick up more loads. 
  • Factoring can eliminate employees’ time spent on invoicing, following up on invoices, collections, or checking on payments. This will free up time in the business to focus on other areas, resulting in greater productivity and profitability.
  • A factoring company can absorb the loss of the invoice while still paying out if a broker goes out of business or cannot pay for a load. Factoring will add protection from bad debts due to non-recourse factoring agreements.
  • Rather than waiting for payment, having instant pay can increase the competitive advantage for a trucking company. Since extended terms no longer affect the companies’ cash flow, better payment terms can allow new accounts.
  • Using trucking invoice factoring can allow companies to gain financial leverage with suppliers and vendors, as capital in hand allows for better negotiating terms and more savings.
  • Less hassle in managing overall freight finances and keeping costs in check by working in a low-fee, no-nonsense freight factoring solution like HaulPay.

To grow the business without the constant headache or stress of cash flow, freight bill funding can make it happen. The funding provides the recipient with an increased sense of security for payroll or o fund any new equipment needed To see these benefits and more, no matter the size of your business, partnering with the best invoice factoring service can do that and more.

Leverage Factoring Through ComFreight to Thrive Now

Rather than relying on customers’ payment and hoping for a creditworthy deal, factoring for trucking companies can provide the security and leverage needed in today’s market. Freight payment services can benefit shippers, brokers, and carriers to grow the business and ensure consistent cash flow. To stay ahead of the rest and gain the competitive advantage needed for the fast-paced transportation market, reach out to the best invoice factoring service today and request a demo of HaulPay from ComFreight to see how the platform improves freight payment processes.

Why Freight Factoring for Both Carriers & Brokers Should Be Radically Transparent, Cost-Effective & Fee Lite

Customers have access to all sorts of information and digital platforms to have full transparency when partnering with the best freight factoring companies. Transparency not only makes for happy customers,  it also can improve efficiency within the company. This is not something that has to be a hard sell to the customer; rather, it’s better to set straightforward realistic expectations that can save time for more critical decision-making.

Radically Transparent Fee Structures Lead to Increased Efficiency

For some companies, the thought of giving customers access to information that may not show the company most positively has no benefits. When discussing the benefits and outcomes from transparent fees, Forbes states, “Potential clients respond well to straightforward talk about what we can and can’t do for them. Since we don’t over-promise, we’re less likely to underdeliver. The result? An industry-leading client retention rate and happy customers whose goals are met.” Customers want transparency and honesty. Having that complete open information about pricing and products will set up the company for more success and growth.

It Builds Trust With Your Customers

Transparency is critical for creating trust with customers and for a company’s overall success in sales and growth. The term implies operating effortlessly for the customers to see and verify the promised performed actions. For freight finance to be handled in any season and provide proper financial assistance, companies should remember simplicity, openness, communication, and accountability. Companies shy from practicing transparency internally, in turn causing hesitation to offer the same to their customers. Transparency allows for customers to have all the information needed to purposefully engage the company on provisions before the purchasing process.

 

Fee-Lite Solutions Make Cash Flow Management Easier

Factoring with a freight factoring company can provide benefits to shippers and carriers without the added stress of management. When explaining the benefits of freight or transportation factoring for shippers and carriers, Inbound Logistics says,  “It’s the classic win-win: Companies that buy a product or service get one month or more to pay, while sellers get their money in just a few days. Trading partners have used factoring, supply chain finance, and similar strategies for some time to maximize their cash flows. Today, though, advanced technologies are increasing the variety of available financing options.”

Integration Between Systems Makes Leveraging Freight Factoring Faster and More Effective

Freight Factoring companies have the tools and ability to use a variety of components and integrated technology to improve system processes with freight finance. Working with a centralized digital software program can eliminate the need for specific invoicing or tedious paperwork and remove the risk of human error. Integrated systems can allow for improved reporting of freight spending, and where data-driven decision-making may increase cost savings.

Factoring Offers Higher Advances Than Traditional Bank Accounts Too

Rather than having to go through a bank, freight factoring companies can qualify brokers for customers to perform credit checks. Bank loans are uncertain, often come with high interest rates, and take a longer lead time to process—which makes loans less than optimal options for capitalizing on time-sensitive business opportunities. Unfortunately, most small business owners may not meet the rigorous qualification criteria or business collateral needed for approval. Rather than stress over the bank for financing credit options, freight companies have more flexibility to ensure the needs can be met. The credit limit can be inflexible and unsuitable for financing spur-of-the-moment business opportunities. Factoring is an ideal alternative for all businesses, regardless of the creditworthiness or the availability of collateral.

It All Comes Together to Create In-Demand Solutions to Freight Factoring Like ComFreight’s HaulPay

The benefits of freight factoring and transparency can help any business by using ComFreight. Some businesses have the fear that transparent and straightforward discussions will lose customers, but we want to be as honest as possible with the solutions we provide. For a factoring company you can fully trust request a demo to see how the HaulPay platform, powered by ComFreight, works.

The Supply Chain and Logistics Technologies in Freight that Improves Operational Costs & Margins

Advancements in technology innovations continue to make big waves across industries, and logistics and the supply chain may be one of the most impacted sectors. 

Technology in the logistics industry provides enormous amounts of data that can be analyzed to increase efficiencies, streamline processes, and offer an improved customer and provider experience, as well as protecting carrier or freight broker profit margin

The Internet of Things to See Real-Time Status

The internet of things (loT) can be used to offer predictive maintenance services with a real-time status that can guarantee the product uptime and provide real-time data to improve sales. The deployment of loT can allow for real-time tracking, smart inventory management, asset management, geo-fencing, and real-time vehicle diagnostics. Real-time tracking is achieved with loT-enabled GPS tracking to monitor the vehicle’s location at all times. The data then is transmitted to a central system that sends real-time updates to the mobile devices. Having such updates and tracking can allow for quick responses to potential reroutes and avoid delays through instant insights. 

AI, Machine Learning, and Analytics

Advanced supply chain and logistics technology can allow companies to automate warehouse operations, properly manage inventory, create more beneficial customer experiences, shorten delivery times, and optimize strategic planning and sourcing. Freight technology can help promote automation and deliver insights that can result in better decision-making that will increase efficiency through data-driven insights. Utilizing the advanced transforming trends in logistics and technology can allow for companies to examine, analyze, and interpret customer trends.

Robots and Automated Workflows

Advancements in artificial intelligence (AI), machine learning, and loT connectivity continue to optimize robots used in warehousing and throughout the supply chain fulfillment process. Furthermore, as advancements in AI continue to rise, improving the precision and mobility of robots, so will the sophistication of the tasks assigned. For functions that traditionally require manual labor, such as picking and packing orders or operating loading tasks, robots will have the ability to increase workflow efficiency. With the benefits of digital tech, trucks driven by robots can be safer and more efficient. 

Route and Optimization Software

According to Mitsloan, “Surveyed companies are investing in predictive analytics primarily to drive cost reduction (cited by 81% of respondents) and improve customer experience (60%). The most promising use cases for supply chain analytics cited by respondents: Inventory visibility and optimization (32%), strategic sourcing and optimization (26%), and real-time product intelligence (22%).” The technology trio of AI, machine learning, and analytics can optimize visibility throughout the supply chain and assist with boosting data quality to deliver genuine business value. 

Increased Cash Control

To improve profitability in customer relationships and orders, companies need to measure the number of order processes and optimize payment settlement to measure consistency in shipping. Informed decision-making about supply processes can also help avoid costly errors. Additionally, the settlement of freight payments services with clients affords opportunities for saving costs by reducing the time between ordering and payment, solving late payments, making missing prices visible, and optimizing invoicing. 

Freight Factoring Software to shorten the Payment Clock

Advancements of technology in supply chain and logistics continue to transform freight payments with digital invoices, tracking loads, and improved data analysis. The trucking industry is a mobile operation, so providing tools that drivers can use on the road is critical. Technology continues to enable fast freight payments directly to the driver or vendor, by bolstering fleet factoring capabilities that result in next-day or, in some cases, same-day cash flow. 

Put the Power of These Supply Chain and Logistics Technologies to Work, While Leveraging ComFreight’s HaulPay to Thrive

As the fast-paced market continues to evolve, businesses must adapt to stay ahead of competitors. To utilize the growth of technology that is integrated with an efficient and streamlined operating system, request a demo to see how the HaulPay platform works.

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.

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.