What is freight factoring?
Simply put, it is using an invoice factoring company to quickly turn your outstanding hauling/freight invoices into cash, so you can grow your business! Go here to check out a good video that explains this further https://www.merituscapital.com/what-freight-capital
Looking for a good freight bill factoring company?
Well, you have options. There are hundreds of freight bill factoring companies in the U.S and Canada. They in come in all sizes, with different perks, costs, offerings, and ways they run their business and service their clients. In our 20 years of servicing clients in the industry, we have noticed some of the main concerns of trucking companies looking for freight factoring to grow their business and we have worked to address them.
Top 5 Concerns of a freight factoring prospect
Here are the top 5 concerns we find with new freight factoring prospects and how we at Meritus Capital help our freight factoring clients and prospects prosper:
With more and more competition and brokers entering the industry, it seems as though margins are getting tighter and it can be even tougher to find business. So keeping your invoice factoring cost low is of great importance.
At Meritus Capital we have great competitive pricing and are flexible in a fee or cost structure that works for you. Often, we will have our clients set up on 10 day increments of 0.35-0.63%. This keeps the fees very low and without the large upfront fee or large bump in fees if a payment comes in late.
Ease of getting set up
Although getting set up with a factoring company is generally quicker and easier than a bank, there is always room for improvement especially with a business owner’s busy schedule.
Meritus Capital has put a lot of resources into making the onboarding process as easy and smooth as possible. We now offer an easy online application that makes it quick and painless for new prospects to fill out and upload the appropriate documentation. We also provide e-signing for contracts which saves you time and money from having to go down to get documents notarized.
Getting funded quickly once you submit invoices can be paramount to having the funds to run your next load, make your truck payment, fill your gas tank or make payroll.
Meritus Capital offers great back office customer service to make sure you get your funding in hours not days so you can get the funds when you need them.
Flexibility & Customer Service
Communication and flexibility are a necessity in a factoring and trucking companies’ relationship. Whether it is credit on a new customer, growing rapidly beyond your current factoring line size or a number of other things, there needs to be flexibility and customer service to make a successful business relationship happen.
Meritus Capital strives to help through communication and understanding to make good credit decisions that will benefit us and our clients, and offer the great customer service that we would expect from a service provider to us.
Contract & Term Length
No one wants to be stuck in a contract where they are hit with hidden fees or where they are unhappy with their factoring companies’ customer service. Especially if they are stuck due to signing a term length that they weren’t comfortable signing initially any way.
Meritus Capital will work win and keep your business by providing great services you want at a great price without the hidden fees. It is true, showing commitment in signing a longer-term contract generally can get your price down but at Meritus we are flexible to work within your comfort level.
How Freight Bill Factoring Works
Freight factoring generally happens in 4 steps.
- Submission of Invoice
After an invoice has been sent to the customer, the trucking or brokerage company will submit a copy of the invoice to their factoring company to verify and advance the amount that was agreed upon.
- Verification of the Invoice
Factoring companies need to know that an invoice is good and is going to be paid. Thus, some type of verification needs to take place to make sure that this is the case. This can take place by checking against the bill of lading or any other backup documents that are pertinent to the transaction or simply by calling or emailing the customer to get a verbal or written verification.
- Funds Dispersed
Once the invoice has been verified, the factoring company can disperse the funds at the agreed upon advance rate. If the advance rate is 90% and the invoice was for $100, then the factoring company would be sending out $90. Often if a freight broker is utilizing a factoring company, the factoring company may also take on the job of paying the hired trucking companies that have run the loads. This helps take some risk away from the factoring company and also eases some of the administrative tasks of the freight brokerage company.
- Invoice is Paid
Once the invoice is paid to the factoring company, they take out their fee and what they have already advanced and apply that to the clients’ reserve account which can be requested at any time. In the end, the business utilizing the factoring service will generally end up with 97-99% of the total invoice value and will have paid the 1-3% for the service.
How to get set up with a Factoring Company
Getting set up with a factoring company is generally pretty simple. First, there is an application that needs to be filled out along with supporting documents that can be uploaded or sent to the factoring company. After the factoring company has reviewed these items, terms will be agreed upon and a contract will be sent out. Once invoices are submitted to the factoring company, they will verify that the work has been done and that payments are going to be directed to the factoring company. These steps can be finished in as quickly as a couple days to a few weeks depending on the factoring company, how fast the business owner applying can supply the needed documentation, answers to any questions, and a number of other factors.
Meritus has been providing freight factoring for logistics companies for many years in the U.S and Canada. If you have any other questions or concerns about freight factoring, please feel free to contact us and one of our representatives will be happy to answer any of your questions.