Freight brokers often face a financial tug-of-war. On one hand, you’ve got commercial shippers who want to pay your invoices in 30, 45 or 60 days, and on the other hand, you have carriers who want quick payments. To help you better understand the benefits of freight broker factoring, here’s a look at a few misconceptions about this service.
1. Only freight brokerage companies who are in financial trouble opt for factoring.
In the past, some people thought that only start-up brokers or those with financial troubles factored their loads. Experience shows that brokerages in business for decades want to factor to keep up with paying drivers, insurance, fuel costs, and other operating costs. Also, contrary to the myth, many freight brokers who factor their invoices are extremely successful and use the reliable cash flow to fuel their positive growth.
2. It’s too expensive.
When you factor, you can provide your carriers with fuel advances and quick pay options without using your own funds – all for a fee that may be lower than you may think. Compared to traditional bank loan interest rates, factoring fees can be relatively inexpensive. In addition, you can save money and time by letting the factoring company manage your billing and other paperwork processing and storage as well as your collections headaches.
3. Factoring is like a loan from a bank.
Lower fees are only one advantage. When you apply for a bank loan, you will need both good collateral and good credit history. A factoring company will evaluate your application based on the credit worthiness of your customers, not on your possessions or credit report. Don’t forget this last key difference: with factoring, you won’t be accumulating debt.
To learn how factoring can benefit your business, get a complimentary cash flow assessment today.
About Interstate Capital
Interstate Capital has funded over 10,000 companies since 1993, making it one of the oldest and largest factoring companies in the alternative funding market. Interstate purchases nearly $1 billion dollars of invoices annually from hundreds of clients in a wide range of industries throughout North America and each client receives individual attention from a dedicated account manager. Get in touch with us so that you can learn more about the factoring programs designed for freight brokers. Let us customize a program for you.