Transportation Factoring: Problems And Advantages

By Author: Barbara Moori
Total Articles: 5
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Freight bill factoring is the preferred method for truckers to tide over funding problems. In its simplest form, the trucker submits freight bill raised on a member-shipper and gets the bill discounted up to 90% within a day. As is the case with any mode of financing, transportation factoring too has some obstacles. But, the good news is that factoring is easier to manage.

Who Can Benefit?
Obviously, freight brokers, fleet owners, truck operators can benefit from freight bill-factoring services. Majority Freight brokers, buffeted on both sides, from the shippers as well as the truckers, have lost credit rating; and find it impossible to obtain financing at reasonable interest rates. The same catch 22 situation haunts fleet operators, for whom difficulties grow bigger as their business expands. Given this scenario, less said about the owners who operate a single truck on their own is better. Factoring finance is a great relief for all these people.
Shippers too are beneficiaries of the service; truckers prefer to pick up loads from shippers authorized by their factoring company, since they are sure of immediate ...
... discounting of bills.

The Hitches:
Financing day-to-day operations is only one side of the story, but it is the critical part of the travails. Transportation factoring companies are more understanding, when it comes to credit rating and such ‘formal’ obstacles. These companies appreciate the peculiar snags freight brokers face and are considerably more flexible. The same goes for fleet owners and individual truckers.

Transportation factoring organizations go beyond providing credit; they offer many other niche kinds of support, tailor made for the fleet owners and truckers.

The Choice:
Freight bill factoring is tuned particularly for transportation industry; but this is of course, only partly true. A factoring company formed by truckers and operated by truckers alone can work for the truckers. There are several instances of ‘adventurous’ factoring companies, who delivered shoddy service or fleeced the already harassed truck owners.

As such, it would be prudent to check out a few things. Opt for a factor where board members to the managers have been in the freight hauling business. Membership and acclaim from Transportation Intermediaries Association and other trade bodies show that the company is trusted by the industry.

The Advantages:
Freight bill factoring is flexible and convenient in several ways. The credit line can be increased or reduced as per need; and documentation is much simpler. Insurance costs definitely less, when you buy it through a factoring company. Fuel cards (provided they are issued by a reputed factor,) are honored across the country for fuel and also repairs.

The greatest of all advantages is the business leads. If it is good, the transportation factoring company collects information about available loads from shippers; and helps truckers by listing it on the website or send alerts.

Freight bill factoring can play a major factor in success for transporters and shippers alike.