What is Freight Factoring and Is It Right For You?
Carriers • Published on December 23, 2020
What is freight factoring?
Freight factoring is all about cash flow. If carriers have slow-paying customers or brokers then they may have to wait up to 60 days to get paid for your work. However, carriers need cash flow to pay their expenses such as fuel, insurance, payroll, repairs, and more. That’s where freight factoring comes in. Factoring is an easy way to manage cash flow for trucking companies. Convoy offers free QuickPay for every load in our network as well as Convoy Factoring, which provides same or next day payment, with no hidden fees and no lock-in contracts. We process invoices for freight that carriers have hauled, so it is money that is advanced on accounts receivable. Freight factoring keeps the cash flowing so carriers can keep hauling.
How much do freight factoring companies typically charge? Are there hidden costs with freight factoring?
Factoring companies charge a percentage of the load invoice as a fee for the service, typically around 3.5%. Additionally, carriers are often required to pay both invoice processing and ACH fees, which further reduce how much of their earnings they keep.
Why is Convoy Factoring a great program for carriers?
With Convoy Factoring, Carriers of all sizes can factor their non-Convoy loads at rates ranging from 1% – 2.99%. Rate will be determined by the total amount factored. Combined with the 0% charged for Convoy loads through our QuickPay offering, a carrier hauling half of their loads with Convoy sees an average rate of 1.45%, which is 57% better than the industry average. With no invoice or transaction fees, carriers can keep their cash flow constant by submitting each load’s invoice individually, instead of waiting and submitting multiple invoices together. Convoy Factoring features no lock-in contract so carriers can try the program risk and commitment-free. All together, Convoy Factoring can save carriers up to $7,000 in factoring costs and associated fees per year.
How can carriers apply for Convoy Factoring?
We have integrated Convoy Factoring directly into the Convoy mobile app so carriers can easily apply, submit invoices, and find their next loads to haul, all in one place.
Already hauling with Convoy? Open the Convoy app to apply for Convoy Factoring
For carriers new to Convoy, sign up here.
Learn more about about Convoy Factoring here