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Freight Bill Factoring for Canadian Transportation Companies

May 8, 2011 By

One of the biggest challenges of owning a logistics company is managing all the payments associated with operations. This is true for both freight brokers and truckers. There are driver expenses, fuel expenses, office expenses and repair expenses. What makes managing these expenses difficult is that few clients offer a quick pay alternative. More often than not, they will require that you give them 30 to 60 day payment terms. That is where the problem lies, especially for growing companies.

Basically, you have expenses that must be paid now and income that will come later. There are only two ways to cover this gap. If you have some capital, you can cover the expenses and wait until you get paid. Otherwise, you will need to get business financing.

Most owners think that business loans are the only form of financing for a business. The challenge with a business loan is that they are difficult to obtain. Most banks in Canada are conservative and will only provide a small business loan if the company has a solid track record and substantial assets.

Furthermore, a business loan is usually better if you use it buy capital goods/equipment, rather than to solve short term cash flow problems. One alternative form of business financing that has been gaining traction in Canada is freight factoring.

Freight bill factoring is a financing product that is designed specifically to solve the time gap between delivery of services and payment. It provides a cash advance against the freight bill, providing funds to meet business expenses and tackle new opportunities. One important difference between business loans and factoring is that freight factoring is usually easy to obtain. The most important requirement is that you work with clients who have good commercial credit and pay their invoices – albeit slowly.

Transactions can be structured in a couple of ways. Most companies opt to get two advances. The first one, about 90% of the invoice, is given immediately. The remaining 10%, less a fee, are advanced once the actual invoice is paid by the client. Others opt for a full advance, where they get only a single full advance (usually higher than 90%). However, these transactions have a higher cost.

The costs of financing are determined by the volume of invoices you finance and the credit quality of your clients.

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Using Freight Bill Factoring to Fund your Transportation Company

April 27, 2011 By

Most transportation company owners have to constantly juggle responsibilities. They have to handle vehicle repairs, driver payments, insurance payments, office expenses and more importantly – collecting invoices. Collections can be source of problems for many transportation companies (or freight brokerages) since most clients pay their invoices in 30 to 60 days . Few can afford to wait that long.

One way to handle slow payment is to try and negotiate a quick pay – basically asking your clients to pay quickly. Some will do it. Others won’t, or at least will only offer it if you give them a discount. Although they are not always reliable, negotiating a quick pay can be beneficial in most cases.

If quick pays won’t work, your best alternative is to secure business financing to ensure you always have funds on hand to cover business expenses. This can be difficult for most owners since institutions require that all applications have stellar credit, assets that can be held as collateral and many years of experience. This will rule out business loans as an alternative for most small and midsized trucking companies. However, this is not necessarily a big problem since a business loan is not always the solution to this problem.

For many, freight bill factoring will be the better alternative. Freight factoring, as it is commonly known, can provide the equivalent of a quick pay by using an intermediary. The intermediary, called a factoring company, advances you funds against your freight bill. The transaction is settled once your client pays the invoice in full.

One of the advantages of freight bill factoring is that it provides predictable cash flow, enabling you to comfortably handle your business expenses. It eliminates having to worry about when your clients will pay.

To qualify for freight factoring you need to work with credit worthy clients. Also, your company needs to be free of liens, judgments and other encumbrances. Because of this, freight bill factoring is an ideal solution for small and growing trucking companies and freight brokers.

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How to Use Freight Bill Factoring to Finance your Trucking Company

April 20, 2011 By

Managing the expenses of a growing transportation company involves a fair amount of juggling. There are fuel payments, driver payments and the constant need for repairs. Juggling becomes a need because most clients take 30 to 60 days to pay their freight bills, while expenses happen constantly. Although large carriers or brokerages may be equipped to handle costs while waiting to get paid, few small carriers can.

One way to solve this problem is to ask customers for quick pays. Many times, that strategy will work. But you will always be at the mercy of your customer. Another alternative is to secure business financing – through a business loan or through freight bill factoring.

Freight factoring works by giving you an advance against for freight bills and is ideal to handle slow paying clients. The advance payment comes from a factoring company rather than from your client. This eliminates having to wait for your customers to pay, and provides you with the needed funds to cover business expenses.

For many transportation companies that are dealing with slow paying customers, freight bill factoring will solve this problem better than a business loan would. It targets the problem at its source since freight factoring is designed to help with slow paying customers. Freight factoring is flexibly and adapts itself to your monthly billings – growing and shrinking as necessary. More importantly, it’s easy to obtain. The biggest requirement to qualify is to have good credit worthy commercial customers. So even a start-up company, whose biggest asset is a strong roster of clients as a good chance of qualifying.

A typical transaction would work as follows. The carrier sends the freight bills and other information to the factoring company, who then issues an advance of 90% (sometimes this can be higher). Once the invoice is actually paid by the customer, the factoring company rebates the remaining 10%, less its fee. Fees vary and are based on volume of your billings and the quality of your clients.

Although not a cure all, factoring can be a great solution for companies that can’t afford to wait 30 – 60 days to get paid by clients.

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Freight Bill Factoring- A Great Financing Option for Transportation Companies

April 5, 2011 By

Transportation is a very cash-flow-intensive business. The operational costs of running this business are huge. Small and medium size trucking companies find it difficult to manage the ever-increasing fuel bills, driver payments, and breakdown/repairs, lease rentals, tire purchases and salaries. However, most trucking companies are profitable, very few new and medium trucking companies can afford the waiting period of 30 to 60 days to get paid. Unless the trucking company is cash rich with deep pockets, this is an abnormally long waiting period which can affect the smooth functioning of its operations.
Both freight brokers and carriers face the problem of balancing slow paying customers and managing day to day expenses. It is quiet common for trucking companies to get paid in 30 to 60 days. Although older trucking companies have enough reserves, it’s the new, smaller and growing companies who find this a challenging to manage. Traditional businesses can ask for quick payments from their clients. However, this does not work with trucking companies, as clients of trucking companies have an upper hand and negotiate for a longer credit period. Availing a business loan is the only option left for the trucking company.
Fortunately there is a tool trucking companies can use to get out of this rut and benefit from a steady cash flow. This tool is called Freight Bill Factoring. Freight bill factoring enables the trucking company to realize their freight bills within a day or two of invoicing thus eliminating the 30 to 60 day waiting period. Once the trucking company puts a factoring agreement in place, it stabilizes the company’s cash flow and enables the trucking company to concentrate all its energies on running the transportation business. With this stress eliminated, trucking companies can focus on growth.
Freight bill factoring enables the trucking company to realize as much as 90 to 97 percent of the freight bill from the factoring company, the balance 10% is paid to the trucking company once the factoring company collects the full amount from the clients. Factoring is advantageous when compared to conventional financing. Factoring is very easy if you meet certain conditions. The first requirement is that trucking companies deal with credit worthy and reputable clients. Factoring can be set up in a matter of days; in fact some factoring companies promise to set up factoring lines in as little as two working days. Freight factoring is very flexible and is directly related to your sales. If your sales increase, so does your finance.
Factoring costs vary from company to company and are based on certain parameters. Usually factoring companies charge 1.5% to 3% per month, depending on the volume and the duration. Factoring companies also insist on the trucking company being free of tax issues. Factoring companies encourage trucking companies to deal with reputable freight brokers and customers. These are the two main conditions that trucking companies have to meet before accessing finance. Factoring companies do not hesitate to work with new trucking companies if they qualify. New trucking companies can get a factoring line within a few days of approaching a factoring company.

Freight Factoring service provider Phoenix Capital Group can help you grow your logistics business. Check out how easy our truck factoring products are to use. Quick factoring quotes can be found at http://www.phoenixcapitalgroup.com

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Use Freight Bill Factoring For Your Trucking Company

April 2, 2011 By

If you own a truck company you must be fully aware that the intensity of cash flow in this business is much higher than most businesses. The list of ongoing expenses like fuel expenses, salaries, truck repairs, rental charges can be overwhelming for anybody. It is a known fact that running a truck company is profitable but the wait for freight bills to get paid after 60 days can be overbearing even for large profitable trucking companies. This situation is more difficult for small and new trucking companies.
In most cases, owners try to get finance from banks in the hope of solving the problem with a line of credits. But this is not easy as the company needs to show a minimum of 3 years of audited finances with regular profits. If that is the case then why would the owner go to a bank for a loan in the first place?
A better solution in such a case is to opt for freight factoring. In freight factoring you are able to convert your slow paying freight bills into easy cash by selling them to a freight factoring firm/company/broker. In this way you are able to get easy finances and handle ongoing expenses for your business. Freight bill factoring is a more flexible way of getting finances as compared to loans.
The process of freight bill factoring for trucking companies is easy. The factoring companies buy your invoices and pays for them upfront. The payment is done in two installments. The first installment, called the advance, of 90-95% of the bill amount is paid when they take over the invoice. The second installment comes when the customer has paid the invoice amount to the factoring company, who then pays the remaining 10% after deducting their fee. This 10% is held up as reserve money in case of charge backs or disputes.
The factoring fee is dependent upon the time taken to clear the invoice and the monthly volume of invoices provided to the factoring company. Discount rate can be from 1.5% to 4%per month depending upon the given parameters.
It is generally seen that factoring companies buy invoices by the non-recourse invoice factoring method. In such cases, it is the factoring company that carries the risk and bears the losses if a client is not able to pay the bills. This comes as an added benefit of factoring and allows you to concentrate on your business to make it grow.
In many cases factoring companies also provide collections and credit protections as part of their services. This saves you from spending more money and time in back office work and provides you with the benefit of concentrating your time and energy and redirecting your money to grow your business.
Freight bill factoring proves to be a boon for the new and emerging trucking companies as they can make their businesses grow without worrying about payments of invoices. Many truck factory owners started factoring their bills to avert dealing with slow or non payers, have with time been able to put away a lot of tension and concentrate in a more focused manner on their business.

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Freight Bill Factoring- An Efficient and Affordable Cash Flow Tool

March 25, 2011 By

Freight bill factoring is a great way to improve your cash flow especially if you have a new freight brokerage business. Financiers and banks usually require proof of profitable running of the business over the past three years at the least before they consider your case for approval of credit. If the age of your business is below the specified limit it will not be possible to submit the necessary papers. This means you will be denied credit, which in turn can threaten the very survival of your freight business. The usual time client’s take to clear freight bills is anywhere from one to two months. In the meanwhile you have to make weekly payments to your drivers and also take care of many other business expenses.

Unless you have sufficient means of your own you may find it extremely difficult to make your business survive.
Freight bill factoring comes to your rescue in such a situation. Its working is quite simple. You forward copies of your freight invoices to the factor after delivery and request a cash advance. The factor advances you up to 90 percent of the invoice value, which you can use to cover business needs.
The difference in freight bill factoring is that approval for finance is not dependent on your own credit ratings but on the credit worthiness of the clients to whom you provide service. The better the credit worthiness and reputation of your clients, the easier it is for you to qualify for freight factoring finance. Moreover, it also offers the advantage of greater financing with an increase in the value of your invoices.
It is one of the most efficient ways of obtaining freight bill financing as reputed freight factoring companies usually take just about an hour to approve your request. Once your factoring request is approved, your account gets credited within the next twenty-four hours. The factor then waits till your client clears your bills after which your account is settled and if there is any balance remaining after deducting the factoring fee that needs to be credited to your account that is promptly done and the account settled.
The entire responsibility of collection on the invoice is that of the factor of which you are relieved, and free to concentrate on building your business for better functioning and profits. Most of the work related to processing of invoices like posting invoices, depositing checks, entering payments, producing computer reports etc. is handled by the factor. It provides you an unlimited source of ready capital for your freight brokerage business as the limit of finance available to you keeps on increasing as you grow your business by servicing reputable clients. No other form of financing incorporates this special feature. This also helps you put a stop to offering volume discounts and early payment discounts that make you lose more money.
Freight bill factoring is the best solution for taking care of all your urgent cash needs for efficiently running your business. It is economical as compared to other forms of financing and can be availed of with minimal paperwork and hassles.

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Freight Bill Factoring Answer the Problem of Short Cash Flow

March 16, 2011 By

Article by Jordan Rocksmith







Cash flow is the name of the game for any business, especially a freight transportation business. You need money to buy fuel, pay for maintenance, pay for other expenses while on the road, pay any drivers who work for you, etc. It should be simple. You deliver an order and get paid for the delivery. Then you have enough money to buy more fuel and meet your other bills on your way to pick up the next order.

If it works that way, you are in great shape. The problem, though, comes from customers that pay you 30 days after they receive your invoice. Although you aren’t paid immediately, you want to maintain a working relationship with them because they are great customers. In the past you have had two options: live without the immediate payment or terminate the working relationship.

Now there is another option that is known as freight bill factoring. This is a process where you turn your freight bill over to another company who will pay you and then collect the money from the invoice directly from the company.

How does it work?

Freight bill factoring is not really a business loan. It is a relationship with a company where they actually buy your freight bill from you. They pay you the money that you would have collected on the bill. At this point, they own the invoice and will collect the money from the company you delivered freight for.

The company that buys your bill will often pay you in two installments. In the first installment they will pay you about 90 percent of the total amount you are due to receive from them. After they have collected the money on the invoice from the company that you delivered freight for, they will pay you the remaining percentage of money owed to you.



About the Author

Fund My Freight (http://www.fundmyfreight.com/) is a freight bill factoring was created to service the underserved small trucking company owner. Funding trucking companies for several decades and have seen just about ever scenario possible through every economic environment.

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Freight Bill Factoring Keeps Many Truckers On The Road

March 7, 2011 By

Article by Terry McDermott







They say that the trucking industry is one of the first predictors of a recession as well as one of the first predictors of economic recovery. When shipping starts to decline that means people aren’t buying. When shipping via trucks picks up steadily, then we are on the right track. Frankly, no matter what the stock market, housing starts and unemployment trends show, the trucking industry indicates that we’re in a recession and are likely to remain in this state for quite a while. That’s why freight bill factoring has become an almost essential practice for truckers.

It is a plain fact that many in the trucking industry are trying to simply survive until things turn around. And the members of the trucking industry have varied profiles. There are large national and regional carriers who are cutting expenses by letting drivers go, small to medium local and regional trucking firms who are following the same course of action and independent truckers with fixed expenses and no revenue if they are not on the road.

Each of these types of trucking entities is implementing specific measures to remain solvent until the economic storm passes. Some, unfortunately, will not make it. But one method many truckers use to keep their cash flow moving and their financial heads above water is freight bill factoring.

Factoring freight bills is a practice that is certainly not new to the trucking industry. I used to work in sales for a small trucking firm and the company could not have operated were it not for the practice of factoring their invoices. Factoring is, essentially, an agreement between a company and a “factor” whereby the factoring agent provides the company with cash advances in exchange for the company’s invoices or receivables. Depending on a variety of conditions, the factoring agent will advance to the company anywhere from 70 – 90% of the value of the invoices. Once the invoices are collected, the company receives the balance of the cash due less a small percentage that the factor is compensated for advancing the cash against the invoices. This rate is typically between 1-3%.

As any trucker will tell you, waiting to get paid by clients can be terribly frustrating. The customer wants the best possible terms for providing their freight business to the trucker and the trucking firm can wait anywhere from 30-90 days to get paid. In the meantime, there are drivers to be paid, trucks to be maintained, fuel to be purchased, etc. And those expenses must be paid right away. A driver is not going to wait up to 90 days waiting for the company to get paid so the company has to either have a large surplus of cash (which is not likely in a trucking enterprise) or access to a line of credit against which they can draw. And we all know what it’s like to get credit these days.

The fact is, the trucker does have an asset in the form of the receivables outstanding through the issued invoices. Eventually, they will get that money and the factoring agent knows that. Consequently, they are willing to “buy” these invoices at a discount from the trucking company and provide most of the cash value right away. This arrangement puts much-needed cash in the hands of the trucker and a few percentage points of the total value in the pocket of the factoring agent or company.

In the current economic climate, factoring is becoming more widespread as a form of financing. Factoring has been widely used by the trucking industry, healthcare and construction industries for quite some time. However, as credit becomes tighter and payment is even slower in coming, many companies are turning to factoring as a means of staying solvent and, in some cases, growing their business.

As I said, the trucking industry tends to be a leading indicator of economic trends. The use of freight bill factoring has made the industry has into one of the leading proponents of factoring receivables as a form of financing. Let’s hope both the trucking and factoring industries are trending in a positive direction for the foreseeable future.



About the Author

Terry McDermott is a former truck driver, freight dispatcher and trucking sales representative. He operates a website dedicated to providing information and resources related to freight bill factoring and other types of receivables financing at FactoringForce.com

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Freight Bill Factoring is providing a financing solution in the trucking industry

February 25, 2011 By

Freight bill factoring is a very common financing tool used in the trucking industry.  Fuel expense, driver pay, and other expenses make the trucking industry one of the most cash intensive segments of the business world.  Factoring for trucking companies has been around for many years and now it is become a very common way to secure working capital.

The typical trucking company searches for loads via today’s Internet load boards and finds loads that offer a fee for providing the transportation service.  These loads come with credit terms that the trucking company must accept in order to get the job.  Often they must except to get paid in 30 to 45 days after they perform the trucking service.  So often the smaller trucking companies are put in a position in which they must front the cash for fuel, and driver payments long before the payment for the service arrives in the mail box.  With today’s higher fuel prices and slim margins this is often a recipe for a cash flow crunch.

Once transport factoring is put in place the factor will purchase the freight bills and invoices from the trucking company which typically provides them 90% to 99% of the invoiced total the same day the trucking company completes the delivery.  The factor charges a fee that ranges from .5% to as high as 5% for the service.  So if the fee structure is 2.5% the trucking company would get 95% up front and after the payment arrived for the invoice a 2.5% reserve would be returned back to the trucking firm while the factoring company keeps 2.5% as the earned factoring fee.

As you can see 2.5% would seem to be a reasonable expense to get paid 30 to 45 days sooner and have access to the funds.  With freight bill factoring in place, fuel can be paid for and drivers can be paid, keeping the trucking company moving forward.  Invoice factoring has been so successful in the industry that even some of the largest trucking companies continue to use the service to fund operations and fuel growth.  If you’re a small, medium, or larger trucking company or freight broker it may make sense to give factoring a look.

Jeff Bross, President, Capital Quotes, LLC

Invoice Factoring

Factoring Rates


Article from articlesbase.com

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Freight Bill Factoring: Driving Your Trucking Company’s Growth

February 17, 2011 By

Growth in the trucking industry is all about freight volume. The more freight you move, the faster your company will grow. But big volume comes with a catch – slow paying customers. Unfortunately, waiting 30 to 45 days to get paid is very common in the industry.


But what if you cannot afford to wait 45 days to get paid by your clients? What if you need to buy fuel, pay drivers or pay for repairs? Employees and suppliers seldom like to wait to get paid.


Needless to say, going to the bank for financing is not an option. They usually do not like to finance small and mid sized businesses. Unless, of course, you have tons of assets, three years worth of financial statements and you have great credit.


So, now what? What are your options?


If you own a trucking company, there is a solution that will provide you with plenty of financing. And as opposed to bank loans, this financing is tied to your freight bills. The more you invoice, the more financing you qualify for.


This solution can provide you with the necessary funds to buy fuel, pay drivers and pay for repairs. And it is available to freight companies of any size. The solution is called freight bill factoring (or freight factoring for short).


Freight bill factoring works as follows:



You deliver the freight and invoice your customer

You send a copy of the freight bill to the factoring company

The factoring company advances you up to 90% of your invoice (10% held in reserve)

Once the factoring company gets paid, they rebate you the remaining 10% less their fees

As opposed to bank loans, factoring has no arbitrary high limits. You can factor as many freight bills as you can generate. So, as your company grows, so does your financing.


Factoring is a great tool to finance growing trucking companies that need money to grow. It allows you to take on new opportunities to drive your company to the next level.

About Commercial Capital LLC

We specialize in business financing. We can provide you with a free freight bill factoring, freight factoring or invoice factoring quote. For an immediate consultation, call Marco Terry at (866) 730 1922.


Article from articlesbase.com

Freight bill factoring / purchasing doesn’t have to be hard, it’s easy that’s how we see it at Financial Carrier Services. You pulled the load, we will pay your deserved funds and invoice the customer no games. Since Financial Carrier Services has ownership in common with both a medium size carrier and a large brokerage, feel free to come on in or call and discuss business in general — we can all learn from each other when it comes to how to find freight, deal with problems, or increase our business. Financial Carrier Services will also work with freight brokers and welcomes start-ups
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