Transportation Factoring 101

Welcome to Transportation Factoring 101. your continuing online education in the nuts-and-bolts of factoring. All of our lessons are bite-sized chunks of information you can read and digest in a few minutes.

If you don’t know much about the business of factoring, don’t feel lonely. Most Americans don’t know much about factoring. Even a lot of business people are unaware of freight factoring and factoring services. Factoring isn’t taught in most business colleges and it’s seldom mentioned in business plans, yet it’s an essential part of the American economy. Factoring takes place in almost every industry but we’re going to deal exclusively with freight factors.

Learn How Transportation Factoring Can Help Your Company

The sad thing about transportation factoring is that most people don’t really understand what it is, even if they know that it’s a resource to help trucking companies.  You’ve got expenses that you have to cover no matter what your firm’s size and age is.  Since there are going to be plenty of times when those expenses come to the foreground before you get paid on whatever job’s you’re working, you’re going to find yourself in a tight spot that has to be dealt with so that you can stay in business.  The best way to do that is by selling your invoice to a reliable factor.

Having the money you need is essential.  Everything from gas to payroll to taxes has to be paid right away, or you’re going to be brought to a grinding halt when those obligations aren’t met.  When you can cover all of your expenses, you’re in much better shape than you would have been if you were still waiting to get paid on your last load.

The only thing that you need to understand, really, is which kind of transportation factoring service you need.  There are a number of different options available, even though they all come down to selling a debt you’re owed in order to get money you need right away.  There are times when either recourse or non-recourse services will be better for you, and there are even specific programs available for freight brokers.  So, there’s always going to be something that’s a good option for helping you to support your company.  You just have to stick with reliable factors and talk with them about what your best option’s going to be.

Of course, it’s important to make sure that you’re left in the best position that you possibly can have.  It isn’t good enough to go for a non-recourse deal if it doesn’t get you all the money you need, while getting the greater balance of an invoice won’t help you any if you can’t afford to take a hit if your client doesn’t make good on the bill to the transportation factoring company.  You’ve got to do what’s right for your business, so you shouldn’t just dive in to any decision.  Instead, you should be careful with your decision, practicing due diligence to make the right choice.

The first step in this always has to be learning what the various options are.  Transportation factoring can be a consistent resource to alleviate a tight cash flow situations.