Broker Factoring Mythbusters: It's All-or-Nothing
Fleets that operate five trucks or less comprise 86 percent of FMCSA-registered motor carriers. Small fleets are the bedrock of capacity for brokers and prefer doing business with those who pay within 15 days, and perhaps 10 days or less, to cover their operating expenses for loads that include fuel, driver payroll, and equipment maintenance.
Continuing from last week’s blog, we’re diving into myth 2: factoring is all-or-nothing
Factoring companies have traditionally had monthly volume requirements for brokers. This model has changed as some companies now allow clients to choose the particular loads they want to accelerate payment on.
In addition, some factoring companies offer free credit checks as a service to provide brokers with advance notice of whether or not they will be able to factor loads from a particular shipper. This makes the process significantly easier and convenient on both carriers and brokers. You can check out InstaPay’s credit check demo here.
To choose which loads to factor, a freight broker could print a select group of freight bills from its accounting system. The bills and corresponding proof-of-delivery documents can then be scanned and uploaded to a factoring company’s online portal.
Alternatively, data integrations between the online platform of factoring companies and the transportation management systems (TMS) of brokers can eliminate the printing, scanning and uploading process. Loads that a broker wishes to factor can be selected directly from within the TMS.
Once the documents are uploaded, brokers can receive electronic payment in their own bank accounts on the same or next day, depending on the time of day the transaction was completed.
Want access to online credit checks and a painless factoring process? Sign up for InstaPay today! We offer a 3% flat rate with same-day payments. Factoring isn’t all-or-nothing and neither is doing business with us – you’ll never be locked up in a contract with us.