Frequently Asked Questions About Factoring for Truckers
What is freight factoring?
Freight factoring, also commonly known as truck factoring, is when truck drivers sell their unpaid invoices to a factoring company in exchange for a cash advance.
How does the freight factoring process work?
The freight factoring process can be explained in a few simple steps.
- Tell us about your business by either calling us or filling out an online form.
- We match your business with a freight factoring company that best fits your wants and needs.
- The freight factoring company puts your business through a quick approval process.
- Your business submits invoices for work that has been completed.
- The freight factoring company contacts your customers, verifying your completed work.
- Your business receives up to a 95 percent cash advance on the account receivables from the freight factoring company. They keep the remainder of the amount as the reserve.
- Your customer pays the freight factoring company on their normal payment terms.
- The freight factoring company releases the reserve to you, minus a small factoring fee.
How long does the factoring application process take?
It depends. Applications for freight invoice factoring are typically processed within 24 hours– unless a faster turnaround is requested. Trucking companies who qualify for freight factoring get the cash they need the same day they apply.
What is recourse freight factoring?
Recourse freight factoring is an option that can be chosen when deciding to factor. It features:
- Lower fees
- Rates from 1 to 3 percent
- Advances as high as 95 percent
- No coverage for unpaid invoices
What is non-recourse freight factoring?
Non-recourse factoring is another option for those interested in freight factoring. It features:
- Higher fees
- Rates between 3 to 5 percent
- Advances as high as 100 percent
- Coverage for unpaid invoices
What will EZ Freight Factoring do for my trucking business?
Consider EZ Freight Factoring a matchmaker. We will pair your trucking business with a factoring company that best fits your wants and needs. Instead of your business spending hours trying to find the lowest rates or the fastest turnaround, you can sit back and focus on your business while we do the work for you.
Are start-ups eligible for freight invoice factoring?
Yes, start-ups are eligible for freight invoice factoring. Factoring even provides funding for owner-operators who are just starting up!
Does freight factoring require a sign-up fee?
No, freight factoring does not require you to pay a sign-up fee.
Does my credit score affect my ability to factor?
No, your credit doesn’t affect your ability to factor. Freight factoring companies collect payment from your customers, so even those with poor credit can freight factor.
Do I have to factor all of my freight bills?
No. You choose which loads to factor. Freight bill factoring provides trucking companies with flexibility and does not have any minimum volume requirements.
Will I be locked into a long-term factoring contract?
No, you will not be locked into a long-term factoring contract. If you want to stop factoring, you will just have to give the factoring company a 30-day notice.
How is the money sent to me?
Money is typically sent directly into your account electronically by bank wire or ACH. Direct deposit and wire transfer provide immediate cash. Clients can also have funds sent directly to fuel card accounts.