Freight brokers are a crucial part of the transportation and logistics industry, connecting shippers and carriers to ensure that freight is delivered on time and at the right cost. In order to remain competitive, freight brokers must consider all available options in pursuing their business objectives. One tool that they can use to simplify their operations and free up cash flow is a factoring company for freight brokers.
So, the question is, “do freight brokers use factoring companies?” And the answer is “100% Yes! Absolutely!” In fact, at OTR Solutions, freight brokers are some of our happiest clients. In this blog post, we’ll provide some insight into how factoring fits into the picture for freight brokers.
What is a freight factoring company?
Freight factoring is a financial service available to truckers, owner-operators, and freight brokers, allowing them to quickly access capital by selling their unpaid invoices to a factoring company. For truckers and owner operators, this means that instead of waiting for the shipper to pay for their goods, which could take months, the driver gets paid immediately through freight factoring. For freight brokers, using a factoring company means the factoring company for freight brokers will pay the broker directly for their driver’s invoices, allowing them to free up their cash flow and pay their drivers quickly. The customer will then pay the factoring company for the outstanding invoice.
You might wonder, well, if the customer never pays the invoice does that come back on the freight broker? No, it doesn’t.With true non-recourse factoring like OTR Solutions offers, the factoring company assumes the risk of the customer not paying leaving the broker worry-free if the customer doesn’t pay.. When looking for a factoring company for new freight brokers, be sure to stick with non-recourse factoring. With recourse factoring, the broker would be on the hook if the customer never pays for your driver’s services.
How can factoring benefit freight brokers?
As a freight broker, having a factoring partner is an excellent tool, giving you a financial break as you continue to work with truckers to deliver loads and are able to quickly pay them.. Factoring for freight brokers offers stability for your business, in a world where managing finances can be a stressful task. Here are the many benefits that freight brokers enjoy when they opt to use factoring companies for freight brokers.
#1 It’s good for cash flow
. With cashflow being an issue for many freight brokers, freight factoring companies provide an invaluable financial solution that can help keep businesses afloat during difficult times. By partnering with OTR Solutions, factoring freight brokers can take advantage of cash flow immediately after an invoice has been created, access cash quickly when they need it, maximize profits without having to wait for payment from customers, and cover costs upfront.
#2 Keeps you ahead of the competition
Factoring companies for freight brokers purchase invoices, providing a quick injection of capital which in turn allows brokers to expand their business and remain competitive. When you partner with a factoring company, you’re in a much better position to grow your brokerage compared to those who elect to weather the world of freight on their own.
#3 Scale up and make important operational decisions
As a freight broker who uses factoring, you have the capital to work with when you need it. With consistent additional income flow, you’re now in the position to make substantial financial decisions as you continue to grow your business. The opportunities are endless with added financial freedom.
#4 Your fleet will be running optimally
As a factoring freight broker, managing your fleet will be a breeze. With dedicated back office support like OTR Solutions offers, you’re able to stay focused on building new relationships and growing your business as we handle all the billing and collecting from shippers. With our integration with DAT Freight & Analytics, you’ll have greater visibility into loads that can be factored. Additionally, our fuel and lumper advances allow your drivers to complete their route stress-free. As the boss, you’re now in control of your operations giving you peace of mind and the confidence to see your business grow.
Worry-Free Financial Management with OTR Solutions
When you partner with OTR Solutions as your factoring company, your accounts receivable will be managed by OTR’s top-notch customer support, while also building your credit history leading to a stellar credit score. Paying your carriers is easy and simple with factoring, allowing you to not have to wait for payment from the shipper. As a factoring freight broker, your carriers will receive funding from us within 24-48 hours..
Get started today!
Brokers that manage their cash flow properly can stay in business for the long haul. Those that don’t usually go out of business quickly. While there are a number of ways to improve your cash flow as a freight broker, using a factoring company is one of the most effective methods. If you’re not currently using a factoring company for freight brokers and would like to learn more about how it could help your business, we’d be happy to answer any questions you have. Be sure and ask about BOLT Instant Payments!