How factoring services for trucking companies get drivers paid faster
Getting your workers paid on time is an important part of making sure they get what they’re owed for their hard work and that they remain satisfied working for your company. Getting payments out on time, though, isn’t always as easy of a task as it might seem to be. This is where factoring companies come in. Knowing what they are and how they can help your business, particularly if you’re a freight trucking business, is essential to making sure you don’t run into unexpected cash flow problems and that your drivers get paid what they’re owed on schedule.
BP Financing is a company providing factoring services for trucking companies to help make sure truckers get compensated on time for their hard work. If you manage a trucking company but aren’t familiar with how a factoring service works, it’s paramount that you develop a better understanding of how this kind of service can help you with important elements of your business like maintaining positive relations with your employees and clients.
Read on to learn more about what a factoring company is, some of the general benefits of a factoring service, and how freight factoring in particular works.
What is a factoring company?
Factoring companies buy your unpaid invoices at a discount so that you can get the funds needed for your business faster. The discount at which a factoring company buys these invoices is how they make money. This discount is their “factoring fee,” which often ranges from 1-5% of the total invoice price. Factoring companies also don’t typically pay the full agreed-upon amount for the invoices up front, usually paying a large percentage first, then paying the rest once the invoices are paid.
You receive payment for the completed work faster this way, but the trade-off is that you’re receiving less money than if you had received the full payment for the invoice. These payments can take as much as a few months to process, though, and many companies can’t afford to wait that long to get their payment from a job. It’s often better to just get a majority of that money immediately to take care of expenses like employee salaries.
Benefits of factoring services
We’ve written on our blog in the past about some of the benefits of using factoring services like ours, regardless of what kind of business you operate. As mentioned in the previous section, some of the immediately-recognizable benefits of using a factoring service include getting cash faster and maintaining a positive relationship with your employees by making sure they get their payments on time.
In addition to those benefits, though, taking advantage of a factoring service can also keep you from having to take on a business loan to cover your payments. Loans can come with high interest fees that may make them more costly than if you simply had the money you were due to receive for your company’s work more quickly. Getting that money through a factoring service avoids this consequence because interest payments aren’t required for the money you receive, and that money has no impact on your credit score.
How freight factoring works
Freight factoring with BP Financing is fairly simple. You’ll need to submit any paperwork related to your delivery, including your invoice, and we’ll assess how likely your customers are to meet their payment terms. If you qualify, you may receive funds in your account the very same day you apply!
Need a factoring service for trucking companies? Contact us now!
Your truckers drive long distances over extensive periods of time shipping deliveries to your valued customers. Taking advantage of a factoring service is the best way available to make sure they’re fairly compensated on time for their hard work. Contact BP Financing today to learn more about how we can help.
