How does Freight Factoring work?

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What is freight factoring?• Often used synonymously with accounts receivable financing, it is a

form of commercial finance that accelerates cash flow and can be referred to as off balance sheet financing so not in the form debt or equity but more obtainable than traditional bank or equity financing.

Confused? Keep reading

Stay with meLet’s say a carrier has a factoring company, what they’ll do is a move a load for their customer, either a direct shipper or a brokerage, they will pick up the load, deliver the load, send their bills to their factoring company, the factoring company will pay the carrier immediately and the customer will pay the factoring company within the next 30 day period. The factoring company will charge a pretty low fee like 1-3%, it’s usually less expensive than most 24 hour or 7 day quick pay policies. Generally there are 3 parties involved, there is the seller of the product or service who originates the invoice, there is the debtor which is the recipient for the services rendered, and then in between is the factoring company.

LogisticsAcademy.org Freight Broker/Agent Training

• Learn about the different types of freight factoring in our course!

• Choose a factoring company too

• There is factoring available for Freight Brokerages!