Like most trucking companies, you’re in this business long term and you need to be considering utilizing a freight factoring service. It’s the easiest way to solve your cash flow problems and will save you valuable time in your accounting department.
While freight factoring services have become a necessity in the trucking community, some companies fail to take advantage of everything the service has to offer.
One of the main reasons a trucking company might neglect freight factoring services is because they don’t think they’ll be able to qualify. In reality, qualifying for freight factoring is a quick and easy process that doesn’t require you to have perfect credit.
To help you better understand what the process is like when qualifying for freight factoring, we’ll discuss everything you need to know below — including what freight factoring is, what you’ll need to qualify, and how to get started today!
What Is Freight Factoring?
Freight factoring services will give your company an advance on any open invoices that fall within the typical 30-90 day pay period. Since most of your clients will take a majority — if not all — of those 30-90 days to pay your invoice, this can leave you in quite a hole when cash is needed now.
Think about all the things that come up on a daily basis, let alone a weekly basis, with your trucking company. Fuel expenses, maintenance costs, rent, utilities, equipment, employee payroll, and much more will start to eat away at your available cash.
The longer your clients take to pay you, the tougher it will be for you to manage your company and keep it moving forward with confidence. With freight factoring, you’ll receive an advance on those invoices within 24-48 hours of the factor receiving the invoice.
As a result, you don’t have to worry about your cash flow any longer and will only be giving up a small fee (typically less than 1%) for each invoice.
What Do You Need to Qualify?
When qualifying for freight factoring, you’ll need to have several pieces of information and documents ready for the factor. They’ll politely ask you for these things, but having them ready before you contact the factoring company will save both parties plenty of valuable time.
Here are some of the most important things you’ll need when qualifying for freight factoring services:
- An application form filled out by you
- Accounts receivables aging report
- Articles of Incorporation
- Invoices you’d like to factor
- Clients with a quality credit score
- A bank account set up for business
- Your tax ID number
- Personal ID or equivalent
Once you have all of these things in your possession, you can easily start the process of qualifying for freight factoring. Don’t worry, it is a straightforward process that will involve the factor doing a majority of the work.
You’ll provide the information they need, they’ll make sure it all gets set up correctly. Before you know it, you’ll be receiving advances in a timely manner — instead of waiting 1-3 months before seeing any cash.
“Freight Factoring.” TBS Factoring, www.tbsfactoring.com/freight-factoring.
Shirshikov, Dennis. “Trucking & Freight Factoring: What It Is & How It Works.” Fit Small Business, 18 June 2020, fitsmallbusiness.com/freight-factoring/.