Freight Broker Factoring Program
It will be easy for freight brokers to be in the middle of a slow payment cycle. Shippers that are slow paying may have challenges when paying the carriers and making the business grow. Freight factoring companies for brokers is a way to deal with the slow payment of clients. This ensures the freight brokerage comes with the cash needed for everyday operations.
So, what is the freight broker factoring program? In this blog, you will know how it works, whether for large or small business factoring.
Understanding Freight Broker Factoring Program
The freight broker factoring program allows brokers to pay cover and carriers’ cost of business right away. Instead of waiting 1-3 months for the payment, the program will have instant cash immediately. Freight broker companies come with a process by which the factor will purchase the unpaid freight bill and advance up to 98 percent cash in 24 hours.
Freight factoring services will collect payments from the clients on previous set terms while conducting business as usual. These are what this program does:
1. Dispatching a truck and booking a load
2. Sending invoices to the freight invoice factoring
3. The freight broker factoring program will pay your carriers and you within 24 hours
Flexible Programs for Freight Brokers Factoring
Here you will know the custom factoring solutions for freight brokers of all sizes. Whether your business is registered or you’ve been in the industry for years and factoring will help you get the funding that you need.
* Recourse Factoring
This is a program where freight brokers take on the liability for unpaid invoices. The rates are lower than the non-recourse, that’s why it’s an excellent option for freight brokerages. Just with enough capital to cover up the delinquent customers.
* Non-recourse factoring
It’s another program that takes on the liability for unpaid freight invoices. In this program, freight brokers are not liable for the failure of shippers to pay. This is ideal for startups and small companies that will not have the cash flow to cover the delinquencies.
* No requirements
This freight broker factoring services are ideal for startups because it doesn’t require minimum requirements.
Fuel Cards for Carriers
You can load a part of your advance directly to fuel cards. The drivers can use many truck stops nationwide. In addition, it would be easier to monitor driver spending and recent transactions.
Flexible Payment Options
You may be able to decide how you’re going to pay the carriers. The factoring company will take the overpayment, or you may continue to pay the carriers yourself.
Benefits of Freight Broker Factoring Programs
These are the advantages of freight broker factoring programs.
* There will be steady cash on hand in paying carriers.
* You can have new clients and may grow your business
* Approval will be based on the credit history of the clients
* Prevent wait periods and stipulations of lending institutions
* You will have peace of mind because you know that debts will always be paid
* Offer a quick pay program that will let you keep and set rates while getting the carriers paid quickly.
* Growth in available funding with the freight brokerage
* You will no longer have to waste your time with lots of paperwork. You can focus on finding a new business and quality carriers
* Set a business credit, as you may receive an increased credit line from the factoring company.
Drawbacks of Freight Broker Factoring Program
You should know that factoring is not for everyone. There are freight broker industry experts that are vocal against it. Here are possible disadvantages of this program.
If you are a freight broker, you can make money in the margin. It’s between what shippers would pay and what you will pay the carrier. It also varies between routes, loads, and suppliers. That said, it can be more expensive than other kinds of financing.
* Financial Risk
Many customers will not default on the invoices. They substantially benefit, and only a few brokers will work with clients. However, it doesn’t always mean that no one ever will. It’s even riskier with using a recourse factoring service.