Freight brokers are the all-important liaison between shippers and motor carriers. Manufacturers, wholesale distributors, farms, food producers, and all kinds of other shippers need freight brokers to find the right types of trucks in the right places for pick up and delivery of their goods. Trucking companies need freight brokers to find them loads to carry. The relationships among these three businesses keep our economy on the move.
Timing is critical in all aspects of the transportation industry in many ways. The motor carriers must deliver each load on time and they expect to be paid for their time and their fuel costs as quickly as possible. However, many shippers have lengthy payment terms and will not pay the broker for delivering that load for weeks or even months. That gap between paying the driver and receiving payment from the customer creates a cash flow crunch for many busy freight brokers.
This is where factoring comes in. A factoring company can work with a freight broker and pay them upfront for the completed deliveries. It can also pay the drivers directly without waiting 30, 60, or even 90 days for payment from the customers. The factoring company then collects on those invoices from the broker’s customers. Drivers stay on the road and the broker can continue operating.
Factoring Tips for Freight Brokers
When brokers work with an established factoring company that specializes in transportation, they can also reap more benefits, including discount fuel cards. Some transportation factoring companies also offer them membership in integrated online freight-matching load boards that display their available freight in front of thousands of motor carriers. Finding the best factoring company to increase their cash flow and make their lives easier can make a big difference for freight brokerage owners.