by Eric Belk; Find Eric on Google+.

While freight factoring is a common industry solution for combating cash flow woes that can come with having to wait 30, 60, or 90 days for your customers to pay, it is still a frequently misunderstood service. We’ve put together some of the top questions we receive from businesses interested in partnering with Match Factors for freight factoring services.

1. How Can Freight Factoring Benefit My Trucking Business?

It’s simple—factoring your freight invoices with a reputable trucking factoring firm ensures you have the cash flow necessary to fund and operate your business. We purchase your freight invoices and provide you with a 95% (or higher) cash advance. This helps you avoid the collections and operations headaches that can come with 30, 60, or 90 day account terms, and provides you with the necessary cash turnaround you need to effectively run your business.

2. How Does The Process Work?

Factoring is a simple to manage process:

• Carrier generates customer invoice and sends it to factoring partner rather than the actual customer.
  
  
• Factoring partner provides the carrier with payment within a specific time frame (typically 24 hours to five days)
  
  
• Factoring company sends the invoice to customer
  
  
• Factoring company manages the account collection process
  
  
• Customer sends the payment to factoring partner.

3. How Much Does Transportation Factoring Cost?

It depends on the freight factoring partner you choose. Factoring companies typically charge anywhere between 3– 10% of the invoice in return for their factoring services, with rates dependent of factors (such as purchase volume, customers' days to pay, customers' credit quality, etc.) as well as the breadth of factoring services provided. Most carriers would agree that factoring their freight essentially pays for itself, as it reduces the headaches that can come with customer relations/account collections.

4. What Else Do Carriers Receive From Freight Factoring Partners?

In addition to factoring invoices to help improve cash flow, many freight factoring companies offer additional benefits including:

• Online account management
  
  
• Customer credit checks
  
  
• Fuel card discounts
  
  
• Professional account management and billing services when dealing with customers.

Be sure to evaluate the website of the factoring company with which you’re considering partnering to view their specific additional benefits.

We hope this blog post has helped shed some light on the freight factoring process and how it can benefit carriers. If you missed it, please take a second to check out our recent blog post “Choosing the Right Freight Factoring Company” for more information.

If you’re interested in factoring with Match Factors, please hop over to our Quick Factoring Application to begin the process.