Truckers are always looking for any advantage they can when it comes to running their business. This is why the upgrade their rigs at every opportunity, warn each other of any hazards in the area, and generally keep track of all the rules and regulations that apply to trucking. One of the things that they do try to avoid is billing; most of them do whatever it takes to get paid by the end of the run. This applies even to trucking companies, we’re dealing with invoices is usually more trouble than it is worth. Anything that helps eliminate the paperwork is a welcome thing.
This is where freight bill factoring comes in handy. The basic concept is that a trucker bills someone for the freight that they carried, and then a factor buys the bill, giving the trucker up to 96% of the bill’s value. The factors then deal with the invoice on their own while the trucker pockets the change. In essence, the trucker accepts a small fee and someone else gets to deal with collecting the money owed. This makes life a lot easier for the trucker and he can walk away from the invoice with most of the money he would have earned from the trip. Keep in mind that this applies just as well as to trucking companies as it does individual truckers.
This is a major advantage for all parties involved. Because of the amounts of money involved with freight shipments that small fee can result in hundreds of dollars for the factors who pick up the bill, making it especially worth it when they do any number of those transactions; they are definitely making their money even if a few of those billed do not pay their invoices. At the same time, this means that the trucker is guaranteed to make money from every trip; while they may lose some money with each trip overall they are making more money as they no longer have to worry about people not paying the invoice.
The advantages of the system should be reasonably obvious. The trucker gets most of the money he is owed from the trip, and he can either pocket the money or use it for any number of purposes, such as dealing with bills, maintenance, or anything else. As part of the deal, he does not need to deal with the business of collecting on the invoice he issued; that is instead shifted to the factor. In exchange, the trucker pays from 1.5% to 3.5% of what he would have collected from the bill as the factor takes on the responsibility of collecting the money owed to the trucker.
This is not necessarily as easy as it may sound, however. The trucker does need to apply to the company in question, and it is not automatic. The trucker needs to meet certain criteria, but that criteria depend on the individual company; some of the criteria include experience as a trucker, how much business they do, and even the credit rating of their clients. Basically, the factors want some assurance that the trucker is making some decent money, that their clients pay them, and that the trucker is a good risk. This applies just as much to companies as it does to individual truckers.
Overall, freight bill factoring is a good deal for those involved as it simplifies the business for the trucker and guarantees that he can collect the money owed. While there may be some limitations inherent to the situation, it is generally a good idea for those seeking to simplify their business.