A freight brokerage business can be very worthwhile and beneficial. Freight brokers know that this business is very cash intensive. If you are one of them, then you know that your drivers rely on you to be paid on time. Nevertheless, clients can take up to 60 days to pay for their loads.
 It is unhelpful to get a business loan. If your company doesn't have a great history and solid track record, then you won't be able to get a business loan from bank. In this case a factoring company is what you need.
Financing businesses with little past history but great future prospects are things what factoring companies specialize in. What the factor does is eliminating the 30 to 60 days, what takes to get your freight bills paid. This will help you get your freight bills paid in about 2 days. With the help of this you have the cash you need to pay drivers and meet other business costs.
As freight factoring is flexible, it grows with your company. The more you sell, the more financing you qualify for. So, you see that factoring limits are driven by your sales
You can see the working process of invoice factoring:
1. What you do is submitting a copy of your freight bills to the factoring company.
2. You are advanced with the factor between 90% to 98% of your freight bills.
3. Then you have to get immediate use of the funds. This is because of the factor waits to get paid.
4. The reserve will be rebated as soon as your customer pays the freight bill but if the factor holds a reserve.
There are three variables freight bill factoring costs are driven by. The first is monthly financed volume. The second one is your customer credit worthiness and the last is how long the freight bill goes unpaid. Usually, rates go between 1.5% to 3% per month, depending on these variables.
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