What do you know about freight invoice factoring? It’s a beneficial service where you get immediate payment for loads you’ve picked up and/or delivered. Instead of waiting weeks to get money for your unpaid invoices, you get the payment that same day or within a couple of days typically.
Our guide to the benefits of freight invoice factoring shows all of the reasons to sign up. When you’re ready, we’ve also included a quick guide on how to sign up for invoice factoring.
Learn the Terminology to Choose the Best Factoring Arrangement
Freight factoring companies generally offer different terms. If you’re not accustomed to factoring terminology, this can trip you up. It’s important to understand the different terms to ensure you choose a factoring agreement that best fits your needs.
- Recourse/Non-Recourse:
The first you’ll encounter is recourse or non-recourse factoring. Quite simply, this covers what happens if your broker or shipper fails to pay the invoice.
With recourse factoring, the freight factoring company can come after you for repayment if your client fails to pay. Non-recourse factoring protects you. If your client doesn’t pay, it’s not your problem. Fees are often slightly higher for non-recourse factoring, but it’s ideal for protecting your company if a broker or shipper suddenly closes down or files for bankruptcy.
Some factoring companies offer a hybrid of the two. Generally, you’re protected from having to pay back the money if a broker or shipper fails to pay the invoice. But, if they don’t feel they should pay because of something you did, you do need to pay back the advance. For example, if your driver broke items while unloading the trailer, that’s your fault.
- Advances/Reserves:
When you agree to factor your invoices, the percentage of money that’s advanced to you may differ. A reserve is the money that’s held back from you.
Some companies may only allow an advance of 90 to 95%. Others provide 100% advances. If you don’t get all of the money upfront, you need to find out how long it can take before you get the balance. Ideally, partner with a company that offers no reserves. You want all of your money now, not days or weeks later.
- Factoring Rates:
When you factor your invoices, there is a fee to get paid faster. While some invoice factoring companies charge 3 to 5%, Saint John Capital has the lowest factoring rates around.
- 1% – 11 or more trucks
- 1.25 – 7 to 10 trucks
- 1.5 – 3 to 6 trucks
- 1.95% – 1 or 2 trucks
The lower the fees, the more money goes into your business. It’s important to keep that in mind. You will experience other fees. Watch for bank transaction fees, too. While they can be harder for a freight factoring company to control as they’re set by banks, there are ways to save money. Take a look at ACH transaction fees and wire transfer fees. You may save money by having money paid right to your fuel card or debit card.
Understanding the Other Benefits of Factoring
Sometimes, invoice factoring companies offer additional benefits. Take advantage of them. For example, Saint John Capital’s app allows you to upload BOLs straight to the app for immediate payment. You don’t have to waste time generating, scanning, and emailing or faxing invoices. Take a photo with your smartphone, upload it, and you’re done. Our software will create invoices for you. Upload them to your preferred accounting software.
Another benefit is having access to load-finding software. Instead of driving with a fully or partially empty trailer or bed, fill the space with loads that are at your destination point or an easy drop-off along the way. Saint John Capital has millions of loads available through its load-finding software. Plus, we offer free business credit checks, so you can do your research before agreeing to take a job.
Track loads with ease and assign them to your driver. You’ll always have immediate access to answers if brokers or shippers want an ETA. Plus, when your drivers pick up a load, there’s always the option of getting paid before the load is even delivered. If money is tight as you grow your business, cash at pickup may be a perk you don’t want to overlook.
Talk to us about your Visa cards and line of credit options that make it easy to grow your trucking businesses. With our array of freight factoring services, we give you the power to grow your business at the rate that best fits your needs.
Is It Right For You?
How do you know if freight factoring is right for your trucking company? There are several questions you should ask yourself.
- Do you often wait weeks for your brokers and shippers to pay you? Would a steady cash flow benefit your bottom line?
- Do you have big plans to grow your business but lack access to the immediate cash you need?
- Do you have a hard time paying your bills on time because you’re not paid on a timely basis? Have you paid your drivers late or had to pay only part of their salary due to delayed payments from your clients?
- Do you spend a lot of time tracking down payments? Do you have to have extra staffing to handle collections?
- Do you struggle knowing when you can trust a new broker or shipper? Does the fear of non-payment keep you from accepting their jobs?
- Is your brokers’/shippers’ lack of timely payments affecting your business credit score?
If you’ve answered yes to these questions, it’s time to talk to a professional in invoice factoring. You can get paid instantly and no longer have to worry about tracking down unpaid invoices, and you have the power to pay salaries on time. You no longer worry about having the late payments affect your credibility.
What Information Do You Need?
How do you sign up for freight invoice factoring? It’s a very quick, easy process. Saint John Capital asks four initial questions.
- Name
- Motor Carrier (MC) Number
- Phone Number
After those initial questions, you’ll learn more about the freight factoring options. You’ll need to submit ownership information, mailing and physical addresses, and the names and contact information of shippers and brokers you plan to factor.
You do not have to factor every invoice you get. You’re welcome to pick and choose the brokers and shippers that you factor. If you have a client that you trust, you are under no obligation to add them to your list.
Saint John Capital provides everything you need to get paid quickly, take on as much work as you want, and keep a steady cash flow. We offer 50% cash advances when you pick up a load, 100% cash advances after you deliver the load, and if you upload your bill of lading by noon EST, you’ll get paid the same day. What can be better for your cash flow than same-day payments?
Visit our site, fill out the online form, and you’ll walk you through the rest of the enrollment process. It’s free, doesn’t take long, and makes it so easy to get same-day payments. Sign up with Saint John Capital today.
