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5 Commonly Asked Questions about Freight Factoring

TruckTrucking companies must manage their cash flow carefully just like every other business. This can be tricky when customers take their time paying invoices. Freight factoring is a great way to ensure you always have enough working capital on hand without going into debt.

How Does It Work?

The process of freight factoring is simple. You simply make your delivery and send us your rate confirmation sheet and bill of lading. We then issue the invoice to your customers so you don’t have to. Instead of waiting for your client to pay you, you sell your rights to the invoice to one of the freight factoring companies in Dalton, GA. In return, you receive cash right away, while the financing company takes over the job of collecting the payment from the customer. In return for getting the cash immediately, the financing company keeps a certain amount of your invoice as their fee.

How Do You Qualify?

Your company doesn’t have to qualify the same way they would for a loan. Instead, it’s your customers’ creditworthiness that counts. If you do business with established companies, qualifying for invoice factoring shouldn’t be a problem at all. To get started, you just have to fill out a simple application, and then you’re ready to submit your first invoice.

What Does It Cost?

There are different fee structures available for invoice factoring. For example, you can pay a flat percentage of your invoice to the factoring company. Alternatively, they may charge a certain percentage for every 30 days the invoice is outstanding. In this case, you assume part of the risk when a client takes a long time in paying the invoice, but you benefit if your clients pay quickly.

InvoiceWhat Is Recourse vs. Non-Recourse Factoring?

Recourse factoring means that you’re still liable for your customer’s invoice. If they don’t pay, then the financing company will come to you for repayment. You can also opt for non-recourse financing. This option is more expensive, because the factoring company takes the risk. The benefit for you is that you don’t have to worry whether your customer pays the invoice or not. Our most popular freight factoring programs are non-recourse.

What Are the Benefits?

Invoice factoring allows you to receive cash to pay for immediate business expenses such as gas and insurance. It helps you with planning your cash flow, because it creates a steady, reliable stream of income. You also don’t have to worry about reminding your customers to pay your invoices and sending them to collections if they don’t. This allows you to preserve a friendly relationship with your customers and frees up your time to focus on the daily aspects of running your business.