Reasons to Work with a Freight Broker Factoring Company
The freight brokerage business has been growing exponentially over the last several years. In fact, according to a recent PR Newswire press release by the American Trucking Associations,
…freight volumes will increase by nearly 29% over the next 11 years.
As a result, more and more factoring companies are attempting to “cash in” on this niche. However, as with all other industries, it is always best to work with a seasoned and knowledgeable factoring company that has experience assisting freight brokers. By working with a Freight Broker Factoring specialist, you are not only able to obtain same-day funding for your invoices, but you can also take advantage of several benefits that you would otherwise forego by operating independently. Following are several key reasons why a freight brokerage should consider working with a specialized factoring company:
A Freight Broker Factoring Company Will Offer Quick Pay Options
Many brokers who are first starting out will find it nearly impossible to offer quick pay options to their carriers on a regular basis simply due to working capital constraints. This, in turn, will lead to fewer carriers accepting loads from the broker. In order to offer quick pay options and book more loads, freight brokers may find it in their best interest to work with a factoring company that will provide quick pay. Additionally, paying the carriers on time will prove useful in establishing the freight broker’s credit history and thus help to book more loads in the future. However, since not all factors will offer quick pay, it is vital for the broker to find a factor that is comfortable with this industry.
Factoring Companies Offer Fuel Advances to Their Freight Brokers’ Clients
Possibly just as important as quick pay options, fuel advances have become a valuable tool for freight brokers to offer their carriers. Again, brokers who are just starting out will find it especially difficult to provide fuel advances due to a lack of working capital. In these situations, it is advisable for the broker to find a factoring organization that will provide the up-front fuel advances to their carriers in the interest of booking more loads and growing the business.
A Freight Broker Factoring Company Will Provide Customer Credit Reports
While the ability to stay competitive and book loads is extremely important, it is equally important to ensure that a broker’s customers pays their bills. In order to do this, the broker can work with a freight factor that provides free credit reports on all new customers. A factor that specializes in the transportation industry will have access to various credit reporting tools that can be used to establish an anticipated pay trend and, even more importantly, help to prevent booking loads for those who do not pay well.
A Freight Factoring Specialist Will Help Manage a Freight Broker’s Payables
Quick pay aside, a true specialist in the freight factoring industry will have the infrastructure to help handle all of a broker’s payables. It is absolutely vital to ensure all carriers are paid on time – whether that is by quick pay or the standard pay terms of net 30. By turning this task over to an invoice factoring firm, the broker is free to spend more time booking loads and growing the business. However, this should always be included with the services offered to the freight broker and not require an additional fee.
Factoring Companies Provide Collections Assistance
The fewer administrative tasks a brokerage is faced with, the more time it can spend building the business. This is yet another reason why it is helpful to work with freight factoring companies. After the factor purchases the broker’s invoice, that factor then helps to ensure payment is made by the customer in a timely manner. Handling collections on one or two occasions may not make much of a difference, but doing it hundreds or thousands of times each month means that the broker does not need to hire more staff or spend valuable time chasing down payments.
Final Thoughts
While there are dozens of factoring companies that specialize in the transportation industry, they are certainly not all created equal. Many Transportation Factoring firms do no work with freight brokers, and even those that do are not necessarily specialists in the field. In order to find the right partner to meet one’s particular needs, it is necessary to do some due diligence and ask the right questions. If you would like to learn more about our programs and how we might be able to help, feel free to contact us today. We’ll be happy to answer your questions and ensure you come to the conclusion that best suits your freight brokerage.