Freight Factoring Companies & Your Customers
According to the American Trucking Associations, “Nearly 70% of all the freight tonnage moved in the U.S. goes on trucks.” So who exactly are the customers that the average trucking company deals directly with while moving all this tonnage? While many of our previous transportation related articles have focused on the benefits of Freight Bill Factoring, this post will address this question by looking at two key variables to consider when choosing between Freight Factoring Companies. Although some trucking factors may claim they specialize in working with transportation clients, this does not necessarily mean they will serve your specific needs. In the freight hauling business, there are generally two different types of customers – freight brokers and direct shippers. Before you make the final decision to work with a freight factoring company, be sure to consider these two scenarios:
Freight Broker Customers
Most people assume that any invoice factoring company working in the transportation sector will factor your freight broker customers. However, given the velocity at which new freight brokers are entering the market, it is vital to ensure that the funding source has adequate credit resources to approve your customers. The ideal funding source will maintain their own credit database reflecting personal experience with various freight brokers, but they should also have a variety of other credit databases to consult when their first-hand information is insufficient. Furthermore, if your freight factoring company will not provide you with unlimited, free credit checks for new customers, it may be time to move on.
Direct Shipper Customers
“Direct shippers” is a broad term used to describe any customer that is not a freight broker. Some examples of direct shippers are construction suppliers or manufacturing companies who contract directly with the carrier to transport materials. If you haul for any of these customers, or even think there may be a chance you will haul for some of them in the future, it is absolutely necessary to ensure your working capital provider will factor these invoices. There are several freight factoring companies, some of them specializing only in the transportation sector, who will not work with direct shippers. Therefore, be sure to understand your potential funding source’s position on working with direct shippers. If they can approve and fund your direct shippers, be sure they have access to the proper credit databases to approve these customers.
Best Freight Factoring Companies
We have significant experience helping carriers who haul freight for all different types of customers, whether they are freight brokers or a variety of shippers. If you are encountering problems with your current freight factoring company, or just want to learn more about how we can help, feel free to contact us by email at sales@orionbusinesscapital.com or telephone at (888) 515-7501. We will be happy to discuss your situation and help determine the best solution to meet your needs.