Common Freight Bill Factoring Obstacles

Freight bill factoring is a great way to obtain immediate cash to pay for your expenses. However, there are a few common obstacles many owner-operators and small trucking companies encounter when trying to factor their freight bills.

Brokers/shippers will not pay the load until “original paperwork” is received.
We understand this can be an added expense to the carriers; however, if the broker or shipper requires originals copies they must be sent in. If not, payment will be delayed because of this requirement.

Your customers are not creditworthy
You can’t control the creditworthiness of your customers; however, it is important to work with credit worthy customers. Many new and small trucking companies have a hard time determining credit worthiness because credit checks can be expensive. With financing options, such as factoring, this concern is lessened. Factoring companies look at the creditworthiness of your customers to help determine credit risk to your business. Not only will they be able to pull credit, they will also be able to use their own database to determine payment history and lessen the chance you will not be paid for the work you completed.

Since freight bill factoring companies can often provide free credit checks on your customers you can benefit by getting valuable information to evaluate who you want to continue to do business with. Fore more information on why this is important, click here.

Previous factoring companies not releasing their UCC Filing to the new factoring company
This typically happens because the trucking company has not yet paid a termination fee to terminate the relationship. This can easily be avoided by working with a factoring company that does not have termination fees.

Payment is not sent to the factoring company
Payment must be sent from your customer directly to the factoring company. When payment is mistakenly sent to someone other than the factoring company, problems and delays can arise.

The information provided in the Invoice Verification shows that issues have arisen including the loads “short paying” due to damaged freight, late arrival, wrong temperatures in refer loads, missing paperwork, delay in sending paperwork to broker/shipper, missing product and more.
When the factoring company sends the invoice verification to the debtor and they return it stating that there was an issue with delivery of the load, the factoring company cannot move forward.

Even with a few common obstacles can trucking companies can encounter when trying to factor their freight bills, it can still be the perfect solution to getting immediate access to funds to pay for expected and unexpected expenses.

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About Matt Moore

Matt is an expert at helping transportation companies of all sizes grow by giving them access to the working capital they need. He has over 15 years in the financial services industry with 5 years in the transportation industry. He holds an MBA from the University of Phoenix and did his Undergraduate in Economics from the University of Utah.

View all posts by Matt Moore

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