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What is transportation factoring? No, it’s not a mathematical formula from a high school math class. It is a way that trucking companies can stay in business. Often times, a trucking company takes a job and has to pay all of the expenses that the job entails before they get paid for the job. On big jobs, this can be a real issue. If they don’t have the money to run the job, pay the gas, the people, and the taxes, then they are going to lose out on the business. And in today’s economy, no trucking company can afford to lose even one job. Money makes both the world and the wheels go round, and few trucking companies have enough money in the bank to float a big job. This problem can be solved by selling the invoice to another company. Transportation factoring is essentially that. It can be done in several ways, though it all basically boils down to selling the debt the trucking company is owed by their client to a second company in order to pick up immediate cash. This cash is a sale, not a loan. The factoring company has purchased the invoice at a percentage discount and will do all the collecting itself. The trucking company at this point will be doing the job for no further payment. The two options available are recourse or non-recourse services. Both these options have advantages and disadvantages. Non-recourse is more expensive because it means the factoring company cannot come back to the transportation company should the client default whose invoice was purchased. Though non-recourse sounds like a no-brainer, it doesn’t do any good if the trucking company loses all of their profit through the deal, or worse, ends up in the hole. At the other end of the spectrum, non-recourse is a lethal gamble should there be an issue with the factor of being paid. If the business cannot absorb the loss, they’re sunk. Regardless, a trucking company has to be careful, assuming only the risk it needs to assume. Every business has risks, and small to medium sized trucking companies cannot stay in business without transportation factoring. Fund My Freight (http://www.fundmyfreight.com) is a transportation factoring was created to service the underserved small trucking company owner. Funding trucking companies for several decades and have seen just about ever scenario possible through every economic environment.
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