A Guide to Freight Factoring for Trucking Companies

💸Freight factoring allows trucking companies to receive payment faster, avoiding the need to wait for 30 days.

🚚Factoring companies like RTS buy invoices and pay trucking companies a portion of the invoice amount, charging a fee for the service.

⏱️The time it takes for brokers to pay can vary, but factoring companies expedite payment, usually within a day or two.

💰Factoring companies retain a percentage of the invoice amount as a fee for their services, typically around 2-5%.

📊Factoring helps small trucking companies improve cash flow by providing faster access to funds for expenses and owner's pay.

What is freight factoring?

—Freight factoring is the process where a company buys a trucking company's invoices in exchange for early payment. It helps trucking companies access funds faster and improve cash flow.

How do factoring companies work?

—Factoring companies purchase invoices from trucking companies and pay them a portion of the invoice amount upfront, usually within a day or two. They charge a fee for their services, typically around 2-5%.

Why would a trucking company use factoring?

—Trucking companies use factoring to improve cash flow and cover expenses while waiting for payment from brokers, who often have payment terms of 30 days or more.

How fast can trucking companies get paid through factoring?

—Factoring companies typically pay trucking companies within a day or two after purchasing the invoices. This allows trucking companies to access funds faster and avoid long wait times for payment.

What are the fees associated with factoring?

—Factoring companies charge a fee, usually around 2-5% of the invoice amount, for their services. This fee covers the cost of purchasing the invoices and providing early payment to the trucking company.

00:00Introduction to freight factoring and the importance for trucking companies.

02:08Explanation of how factoring companies buy invoices and pay trucking companies faster.

02:52Details on the time it takes for brokers to pay and how factoring expedites payment.

03:44Information on the fees associated with factoring, usually around 2-5% of the invoice amount.

04:40Benefits of factoring for small trucking companies in terms of cash flow and expenses.