Freight Factoring For Dummies – How Does It Work

 A lot of people who aspire to enter the transportation and logistics industry could really do well in the freight factoring line of business. Understand what it is and how it works if you want to make a business out of it. Freight invoice factoring is a very practical solution that helps out both drivers and carriers at the same time. It also relieves the customer of making immediate payments to the carriers/drivers if they are not in a position to do so.

A freight factoring service works by purchasing the accounts receivables or invoices of a business. The freight factoring company pays for the invoice within 24 hours after deducting a nominal fee. They are the go-to solution for many trucking companies regardless of their size when they seek immediate cash flow and want to get back to their core operations immediately.

Understanding How Freight Factoring Works

After a driver /carrier has delivered their load, they are going to submit the rate confirmation and BOL to the factoring company. The freight factoring company is going to verify the delivery with the brokerage. Once it is verified, the payment will be deposited into the account of the carrier through wire transfer. It can also be made instantly through the fuel card. Several freight factoring companies in the industry have made it simpler and faster for carriers when it comes to providing their information. They can use their online portals to create the invoice and submit the rate confirmation and the bill of lading on the internet.

Getting Paid As A Factoring Company

A freight factoring company gets paid when they collect the payment on the invoice sold to them. They are going to collect the payment from the customer and the invoice for that payment is then marked closed. Eventually, it is going to be up to the factoring company as to when they decide to collect the payment for the lifetime of any particular invoice. Factoring is meant to simplify the lives of all the players in the transportation industry. The truckers and drivers get paid within 24 to 48 hours of their load delivery. This lightens up the burden of the customer significantly.

It also promotes healthy relationships among all the parties involved in any transaction/delivery. Freight factoring speeds up business and it is a very safe and practical way to make and receive payments in the transportation and logistics industry.

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