Factoring can be pretty complicated and intimidating. We've taken the time to answer some common questions we get. If you have any additional questions, don't hesitate to shoot us an e-mail at firstname.lastname@example.org!
What is Factoring?
Factoring is when a factoring company buys your invoice (what you charge your customer for your service) from you at a very small discount and then collects the full price from your original customer.
Why is Factoring Helpful?
Factoring allows you grow your business by getting cash immediately without taking on extra debt. This eliminates long payment terms like 60 or 90 days which can cripple a business.
What is a Broker?
A broker is a person who typically connects one company who needs a service with another company that provides that service. In the freight industry, a broker usually connects a shipper with a carrier and takes a small fee on their transaction.
What is a Shipper?
A shipper is the person who owns goods, products, or materials that need to be transported from one location to another.
What is a Carrier?
A carrier is another name for a freight company, trucking company, or transportation company who transports goods that they do not own, providing their services for a fee.
What are Receiveables?
Receivables are the total charges from one company to a customer for goods or services. These charges are requested from the customer through an invoice.
What are the typical fees for factoring?
Fees vary based on the payment terms that were agreed upon by the carrier and their customer. Typical fees range from 2-4% for 30 day terms and 3-6% for 60 day terms. These rates also decrease as shipping volume increases.
Do I need good credit for factoring?
No - you do not need good credit for factoring as factoring is not a loan. Factoring helps you get paid within 24hrs for work you have already done, rather than waiting 30-90 days to get paid.