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What Are the Pros and Cons to Freight Invoice Factoring?

Freight invoice factoring has been around for a long, long time. It’s not a new service, but it’s one that some trucking companies overlook, especially if they’re new to the business.

What if you could pick up or drop off a load for your shipper or broker and get paid instantly? Imagine how much easier it would be to conduct business if you didn’t have to spend hours invoicing clients, chasing payments, or waiting days to see if the check clears.

That’s all part of the benefits of invoice factoring. Before you sign up, make sure you understand the pros and cons of freight invoice factoring and are okay with the rules and your obligations.

Explore the Cons of Freight Invoice Factoring

There are many pros to freight factoring, but people tend to want to hear the negatives first. Here they are.

  1. You Do Pay a Small Fee

Invoice factoring companies have to make money to pay their staff. They get this money by charging a fee for factoring invoices. These rates are a percentage and can fall into a range of 1% with the best freight factoring companies to as much as 5%. The lowest rate isn’t always the best deal, it all comes down to if there are hidden fees or bank fees.

Saint John Capital’s factoring fees start at 1% and depend on the number of trucks in your fleet. Even if you have one or two trucks, you won’t come anywhere near 5%. Plus, we use a flat-rate system, so you’re not going to experience hidden fees.

  1. Some Arrangements Require Repayment if Your Client Doesn’t Pay

Check the freight factoring company’s rules and see if they use recourse or non-recourse factoring. Some require you to repay the amount they paid you if your broker or shipper fails to pay after X amount of days. This is called “recourse” factoring. Always partner with a freight factoring company that doesn’t turn around and demand repayment, known as “non-recourse” factoring.

  1. There Can Be Hidden or Other Fees

Bank transaction fees are one of the other fees you might come across. It’s a fee charged to wire money to your specified bank or to complete the ACH transaction. Check if the factoring company charges bank fees to ensure they don’t take you by surprise.

You may also find hidden fees like subsequent fees or float days that can eat into the money you’ve earned. Look for factoring companies that use flat fee structures and avoid these extraneous fees.

Weigh That Against the Pros

The pros of freight invoice factoring usually outweigh the cons, especially when you are growing your company and can’t wait for clients to pay you. Immediate payments are always beneficial when growing a company. Check out all of the pros.

  1. You Get Paid Now

When you partner with an expert in freight invoice factoring, you get paid immediately. You get paid part of the amount due when you pick up your load and submit the signed bill of lading at pick-up, or you can get the full amount when you drop off the load and submit the bill of lading. It’s your choice.

Depending on the options you choose, you could get paid the same day you drop off a load. As long as you have a Saint John Capital Visa and submit your bill of lading by the daily deadline, payment is sent to your card the same day you request it.

Make payment requests via your smartphone, so you don’t have to be near a computer or in your office. You can get paid while you’re on the road and have money immediately available for your next fill-up.

  1. Invoices Are Generated for You

To get paid, you submit a bill of lading. You don’t have to go to the office, generate an invoice, and mail or fax it to your client. Submit the bill of lading through the app and your freight factoring company pays you and generates an invoice that you can upload to your accounting software.

  1. You Don’t Need a Fax Machine or Stamp and Envelope

In the past, you spent hours generating invoices and faxing them or even mailing them to your clients. That’s no longer necessary. You can stop trying to locate a stamp or envelope. You don’t have to deal with a fax machine.

  1. Staff Has More Time for Other Tasks

Because invoices are generated in the app and uploaded to your accounting software like QuickBooks, your staff can spend time on other office tasks. You’ll run your office efficiently while having extra time for marketing, finding new loads, or social media campaigns.

  1. You Don’t Fall Behind on Bills

Have you run into a situation where you aren’t getting paid on a timely basis, so you can’t pay your creditors? You’re now 30 days late, so you get slapped with a costly late fee. Those late fees eat into your business profits. Get paid instantly and avoid these late fees.

  1. Your Bad Credit Doesn’t Matter

To factor invoices, you may think that you have to have excellent credit. That’s not the case. Your credit rating and history do not matter. Your broker or shipper’s credit history is considered, but there are free business credit checks you can access to make sure you’re partnering with reliable companies.

  1. You’re Not Taking Out Unnecessary Loans

When you get paid instantly, you don’t have to take out a business loan that you really can’t afford. Grow your business first and get on solid financial footing before you start thinking about business loans for new trucks or more efficient equipment.

  1. You Save Money on Fuel

Like other freight invoice factoring companies, Saint John Capital offers a fuel savings card. Get paid directly to that card and enjoy fuel discounts. Not only are you getting paid immediately, but you also save a lot of money fueling your trucks. It’s a win-win!

  1. You Can Get More Work

With a factoring company like Saint John Capital, your free enrollment enables you to opt-in to other programs like the Find Loads app. Use that app to find work in areas your drivers are traveling. If you have a half-full dry haul van and need other loads heading to your destination, use the app to find work and fill your trailer. You get extra money on the same trip.

And, you can run a free credit check on the business, which is beneficial if you’ve never worked with them before. You can check out their history and reliability before you take the job.

  1. You’re Able to Pick and Choose

When you factor invoices, you are under no obligation to factor every invoice with a company like Saint John Capital. If you have clients who you know will pay quickly, keep invoicing them on your own and get paid. For those that take longer, use our factoring services to get paid quickly.

Sign Up for Free

It’s free to sign up at Saint John Capital. You’re under no obligation to factor every invoice. Try it out and see what a difference it makes when you’re getting paid instantly. We have been factoring invoices for decades, as far back as 1997, and have many other services available to help you out.

Don’t miss the other services we offer, such as free business credit checks and load boards. Saint John Capital helps you find profitable loads, track loads that are en route, and get paid instantly. Sign up online in minutes.

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