Freight brokers often face an ongoing financial tug-of-war. On one hand, you’ve got commercial shippers that want to pay your invoices in 30, 40 or 60 days and on the other hand you have carriers who want quick payments.
If you’ve got the resources and capital, you can pay your carriers immediately as soon as your load is delivered and simply wait for your customers to pay your invoices. If you don’t have the resources, or if your freight company is expanding and growing at a rapid pace, you can run into cash flow problems. One way to solve these problems is to use freight bill factoring.
Freight bill factoring provides you with an advance on your freight bills. Factoring with Interstate Capital allows you to offer your carriers benefits such as fuel advances and quick pay while paying your own fixed expenses each month so that you can grow your business.
Here’s an example of how this works:
- ABC Brokers hired Joe to transport a shipment for Premium Wholesale.
- Premium will pay ABC’s invoice of $2500 in 30 days, but Joe is requesting quick payment.
- ABC sends Joe’s invoice to Interstate Capital, which advances up to 90 percent of the $2500 to ABC Brokers.
- Interstate Capital pays Joe when directed by ABC.
- The transaction concludes 30 days later when Premium pays $2500 to Interstate Capital and ABC receives the balance, minus a small factoring fee.
Two misconceptions about factoring
- Only freight companies who are in financial trouble opt for factoring
Some people believe that freight companies that use factoring services only do so because they are in serious financial trouble. This couldn’t be further from the truth. One of the reasons why factoring is ideally suited to the freight industry is because brokers often need to wait a long time for clients to pay their invoices.
Factoring is basically just another type of financing. Many businesses need financing solutions such as bank loans, but instead of borrowing money and incurring debt, they choose factoring. Some of Interstate Capital’s freight clients are extremely successful and have used our factoring services to fuel their positive growth.
- It’s too expensive.
With Interstate Capital you can provide fuel advances and quick pay without using your own funds. Outsourcing your payable processing and your collections headaches to Interstate Capital saves you time and money. All these services are provided without hidden fees and are available for a small factoring fee.
Take your business to the next level by partnering with Interstate Capital for factoring solutions that have been designed for the freight industry. Get an instant factoring rate quote today.