Freight Factoring and dealing with Freight Bills

A freight factoring company is a company that "Buys" freight bills for a fee. They are a good solution for a smaller trucking company who might not have the cash flow to wait 30-45 days to be paid. Most freight brokers will pay the carriers on a net 30 day billing, so by the time the carrier gets their invoice sent, it gets to the broker, it goes through their system, the check is cut and sent out, it could be 40 days from the time the carrier sent the invoice. The carrier will usually contact the freight factoring companies, they will send their paperwork to the freight factoring company and the freight factoring company will advance them any where from 90%-97% of the freight bill, they will then hold the rest until they are paid on the invoice from your customer. When they are paid the freight factoring company will cut you a check for the remainder, minus their fee. Some of the bigger factoring companies are Truckerfunds, Trancentral and Firstcommercialcredit. When choosing a factoring company, make sure you do some research because some freight factoring companies might hold you liable if they aren't paid by your customer. There are companies that will take the risk (usually for a higher fee) of collecting, and they wont come after you, but i would read, and re-read everything from a freight factoring company to make sure that you are protected.