As a freight broker, you often face competing demands. On one side you have commercial shippers that want to pay your invoices in 30, 60 or even 90 days and on the other hand you have motor carriers that need fuel advances now and want to be paid immediately. This situation puts the freight broker in the middle of a cash flow imbalance.
If you have reserves of working capital, you can pay your carriers immediately and simply wait for your clients to pay. If you don’t have deep reserves or if your freight business is growing quickly, you may not be able to pay right away and this situation could lead to unhappy motor carriers. However, it can also affect your work with your customers.
Freight factoring can improve your cash flow instantly as well as improve the customer service you are able to offer commercial shippers. Here’s how factoring can improve your customer service and client relationships:
- Take on more loads: You could unknowingly be damaging your relationship with existing clients because you are unable to take on more loads due to cash flow issues. When you partner with a factoring company, you will receive upfront payment for your invoices which will in turn enable you to take on more loads.
- Work with creditworthy clients: While your business might already be offering prompt customer service and outstanding delivery times, relationships can turn sour when some clients don’t pay invoices on time or turn out to have credit problems of their own. Factoring companies review the credit quality of your new clients as well as your existing customer base, which will help you determine which clients have good payment habits. This will enable you to only work with the best clients.
- Remove yourself from the collection process: A factoring company will handle collecting from your customers. They usually have a team of highly experienced collections professionals who will do all the calling and administration involved with receiving payments for you. This allows you to focus on customer service while the factoring company handles your collections.
Interstate Capital, one of the industry’s top transportation factoring companies, has worked with thousands of freight brokers to help them improve their customer service with better cash flow. In addition, the factoring experts at Interstate Capital can offer brokers unique value-added services that save them time and money.
Contact Interstate Capital for a factoring rate quote today.