To surmount this nagging cashflow challenge, you may wonder about freight factoring.

So, are you better off financing your own loads or having a freight finance company help? Here are a few questions to gauge whether to factor your loads or work directly with clients to get paid.

Factoring Loads vs. Self-Financing: What’s the Difference?

Freight factoring (also known as invoice factoring) is a helpful service for many trucking business owners.

It ensures you get paid within less than a week or even the same day, of delivering a load. This is true no matter how long it takes a customer to pay. Many factors also allow you to run free background checks on your customers. This can help you determine whether you’ll face issues with slow payment.

Many owner-operators also choose to get paid directly by their customers. This is largely dependent on whether you have enough cash to self-finance your business. When it comes to high fuel costs and equipment leasing, factors can be a great partners to help you grow.

There is no wrong answer to how trucking companies should operate. However, there are a few easy ways to help you determine whether factoring is right for your business.

Determining Whether You Need Freight Factoring

Here are two of the most important questions to ask yourself when choosing between factoring and self-financing your business.

1. Does my trucking business have a healthy cash flow?

A healthy or positive cash flow means you have more money coming into the company than you’re spending. If you foresee major expenses coming, such as purchasing or repairing costly trucking equipment, your cach flow may tighten. If this means scaling back or working overtime in order to make ends meet, factoring can ease the burden so you can continue to grow your business.

2. How often am I dealing with invoices?

If you’re spending a significant amount of time sifting through paperwork for the week’s hauls, that’s dollars lost. If you only have so much time to relax in between hauls, use it wisely. Many factors are well-versed in trucking operations and have the right staff to help you with your back-office operations. Express Freight Finance, for instance, pairs clients with back-office specialists that take care of invoices.

Benefits of Factoring

Freight factoring, also known as invoice factoring, is a lifesaver for many businesses. 

Many small freight companies have survived industry downturns with the help of freight financing. Here are a few ways using a factoring company can help your business in the long term.

Keeps The Business Debt-Free
Many transportation businesses are at the mercy of large banks and conventional lenders to finance their businesses. In this case, if cash flow becomes a problem, they may have difficulty keeping up with financially burdensome interest rates. Standard interest rates can range from 5% to 30%, depending on various factors. In the long run, especially for smaller operations, this practice isn’t sustainable and can quickly plunge the company into debt.

Immediate Funding for your Loads
Getting a bank loan can drag your loan application for several days — a luxury you cannot afford. One advantage of freight factoring is a swift release of funding. The best factoring companies out there offer same day payment. This helps many owner-operators and fleet owners with major expenses such as fuel for drivers. For larger trucking businesses, it can also help you process payroll quickly.

Free Client Credit Checks
Freight factoring companies will nearly always run credit checks on customers before they factor the load. Why does that matter for you? Credit checks can help safeguard you and/or your drivers from taking on jobs that’ll result in slow or no pay.

A failed credit check sometimes indicates that customer has a history of not paying carriers or haven’t beem established for long enough. Either way, it’s key to minimize financial risk, and credit checks is an easy place to start.

Financial Services Designed for Trucking Businesses
The best freight factoring companies want your trucking business to succeed. A good way to gauge whether you’re choosing the right factoring partner is whether they’re flexible in their contract terms.

It’s standard to pay on an annual or bi-annual basis. However, some factors will build in fees to opt out of your contract or charge monthly minimums. Be sure to check the fine print, especially for hidden fees.

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Trucking companies require a steady cash flow to grow and thrive. If you’re facing major gaps between load delivery and payment or other financial burdens, factoring can truly save the day.

Get a Custom Factoring Rate or Contract Review

To hear more about how factoring can work for your business, get in touch.

Already in a contract? Let one of our agents review it for you. We can help you determine whether you’re paying any hidden fees or may be able to get a better rate.

The post Is Freight Factoring Worth it? appeared first on Express Freight Finance.

Here, we break down the most common factoring fees to be aware of, to ensure you get the best deal for your trucking company.

Understanding the Top Factors that Affect your Factoring Rate

There are several factors that can play a huge role in affecting your rate with the factoring company. It’s important you check these boxes before approaching the company.

• Your Credit History and Age of Business
• Your Customer’s Credit History
• The Volume of Invoices You Factor
• Invoice Amounts
• Recourse vs. Non-Recourse Factoring
• Amount of Time it Takes the Customer to Pay

Your Credit History and Age of Business

Your creditworthiness is one of the several checklist items a factoring company would review in order to guarantee there’s a low risk in financing your business. In order to factor an invoice, the majority of factoring providers require a credit score of 530 or higher, and you need to have been in business for at least 90 days.

Your Customers’ Credit History

It’s just as crucial to check your credit score as it is to verify your customer’s creditworthiness. This helps guarantee that they can pay when they are supposed to. As you read further, we will discuss what to do in the event that your customer cannot pay.

Volume of Invoice Factored

The factoring company will get a percentage of the full price for the load. As previously indicated, most factoring companies require 1% to 5% of the charge that the customer will pay. For example, if the entire amount is $5,000, a 2.5% factoring business would offer you $4,876 and $125 would go to your factoring company.

Watch out for any factoring offer above 3% and make sure to get a few quotes before signing any contract. The team at Express Freight Finance, for instance, evaluates several factoring contracts a year and is often able to offer better rates.

Recourse vs. Non-Recourse Factoring

Recourse versus non-recourse is a technical term in a factoring contract that is often disregarded. However, knowing the difference is vital in determining your rate, as well as preventing unexpected expenses. In a non-recourse factoring agreement, if your client is unable to pay, your factor will not require you to then pay that amount.

This occurs in rare instances when a customer files for bankruptcy between the time the invoice is submitted and the time the money is due. In a recourse factoring agreement, on the other hand, you may be held personally liable for that debt.

The Amount of Time It Takes Your Clients to Pay

Customers are given a certain amount of time to pay, and if they do not do so within that time frame, they will be charged a few fees along the way. It’s frequently done on a tiered system, which means you pay a given amount for a certain number of days, and then the percentage increases.

Some factoring companies will not proactively let you know when your customer is coming up on their deadline to pay. Watch out for fees that can pile up based on this common issue that’s out of your control.

11 Hidden Fees to Watch Out For in Freight Factoring

When signing up or renewing your contract with a freight factoring company, there may be certain expenses that are hidden in the contract, so you must be attentive and ask questions. We’ve highlighted them below.

1. Application Fees
2. Setup Fees
3. Credit Check Fees (for your customers)
4. Wire Transfer Fees or Money Disbursement Fees
5. Due Diligence Fees
6. Late Fees
7. Customer Service Fees
8. Processing Fees
9. Invoice Discounting Rates
10. Minimum Volume Requirements
11. Cancellation Fees

Application Fees

The application fee is the amount that is normally levied at the time of sign-up. It is typically a one-time payment that shows your willingness to enter into an agreement with the factoring company. This creates a favorable environment for additional business discussions and negotiations.

Setup Fees

This is also a one-time fee paid at the start of the transaction between you and the factoring company. This is typically used to keep your account current, provide required reports, and process legal papers.

Credit Check Fees

This fee is used to conduct credit checks for both you and your customer. It’s a crucial stage since it shows the factoring firm that the customer can pay and that you have the resources to repay the costs if the consumer is unable to pay.

Wire Transfer Fees or Money Disbursement Fees

This includes all fees and charges incurred during the disbursement of funds, as well as the maintenance of reserves for each invoice. Payment mechanisms such as wire transfer, ACH, and money codes may all incur fees.

Due Diligence Fees

This is a non-refundable fee paid by your trucking firm to the freight factoring company to express interest in the slot and, if necessary, to secure it. The money is usually paid in whole, although it may be paid in installments as well.

Late Fees

These are fees incurred when the customer does not pay the money within the specified time. After the term has passed, this fee will begin to accrue based on the percentage stated in the contract.

Customer Service Fee

Most factoring companies offer customer service to their customers upon signing up, but in some cases, an additional fee is charged to use their customer service. This is often seen in large factoring companies.

Processing Fee

This fee is incurred during the initial stages of processing your application with the company. When signing a contract with a factoring company, you need to provide two important documents: an invoice and a bill of lading (BOL). Processing fees are also used to process these documents.

Invoice Discounting Rate

Invoice discounting and invoice factoring are two phrases that have often been interchanged. When a trucking company implements invoice discounting, it approaches a factoring company and asks for a specific amount of money, then uses the invoice as collateral.

The trucking company keeps control of the ledger in this situation, and the consumer is unaware that another financial transaction is taking place. It’s also known as “discreet invoicing.”

Minimum Volume Requirement

Some factoring providers have a contract requirement that you factor a certain number of invoices per month. If you do not meet the minimum number of factored invoices for the month for any reason, you will be charged a fee to compensate for the profit they could have made.

Cancellation Fees

Because they offer some of the cheapest rates, many large factoring companies require you to sign a contract that will expire after a specific number of years. As a result, the factoring business will handle your load fees for the next two years, and if you decide to terminate before the end of the contract, you will be required to pay penalties to offset part of the profit they may have made.

Conclusion

Freight factoring helps many small trucking businesses grow with the range of financing options they’re able to provide. Still, it’s important to remain in control of the amount of money you’re investing in your freight factoring company. If you’re about to sign a freight factoring contract, make sure you’re looking at and asking about these eleven fees that are oftentimes buried in the fine print.

The post 11 Hidden Fees in Freight Factoring appeared first on Express Freight Finance.

In this article, you’ll learn the benefits of load boards and how shippers, brokers, and carriers can use them to help their businesses thrive.

4 Benefits of Using Load Boards

1. Brokers and Shippers Find Needed Capacity, Carriers Find Loads

Load boards serve a purpose for each type of company in the transportation industry. Brokers and shippers can post their loads and receive quotes or even digital bookings, helping them gain access to trucking capacity they may not have otherwise had. Carriers can search for loads that work for them and connect with shippers and brokers to find future opportunities.

2. Load Boards Help Start Relationships

Relationships are the backbone of the freight industry, and load boards are a great way to start building new relationships. They bring shippers and brokers together with carrier overloads, starting a new relationship that could potentially become a mutually beneficial business partnership.

3. Load Boards Help Save Money and Earn More

When brokers and shippers can get their loads in front of a wide array of carriers, they’re likely to get competitive quotes that will save them money. Carriers can use load boards to keep equipment moving, so they’re able to earn more. Many load boards also include tools like fuel cost calculators and vetting tools to help carriers choose loads that will pay off for them.

4. Load Boards Save Time

Load boards can save everyone involved a significant amount of time. Shippers and brokers can post loads and let carriers come to them, saving time and money on carrier outreach efforts. Carriers can search for loads that meet their specific needs and even get multiple trucks booked at the same time. For example, carriers can search a specific lane to find a load to get them to their next load with very few empty or deadhead miles.

How to Use a Load Board

Load boards are generally very simple to use, and though each load board has a slightly different procedure, the general idea is the same for the most part. Once a carrier has registered and logged in to the load board, carriers can post their available trucks and search for loads based on the types of loads they want to haul. Shippers and brokers can begin posting loads and searching for available trucks.

Common Load Board Features

Every load board has its own set of features on offer, but there are some common features you can expect to find on the most popular load boards. Some of those features include:

• Integrations with TMS software for automated posting
• Advanced search options to help carriers narrow down their load search
• Pricing tools to help brokers, shippers, and carriers negotiate fair rates
• Load planning tools to help carriers reduce empty and deadhead miles
• Weather and traffic updates
• Integrations with freight factoring platforms like Express Freight Finance speed up the payment process.

Using Load Boards to Help Your Business Succeed

Load boards can help all kinds of freight businesses thrive if they’re used appropriately. Here are some tips to ensure success.

Bid smart. Negotiating can be tricky, but it’s an important part of working in the freight industry. Understand the market conditions, fuel prices, and other key data before bidding on a load to ensure a profitable load, and remember that it’s okay and even expected to leave a little room for negotiation.

Communication is key. It’s never a good idea to assume load details if the details you need aren’t listed. Before a carrier bids on a load, it’s a good idea to make sure they have all the necessary details to ensure they’re making the money they’re expecting. Shippers and brokers can work to be upfront and provide all the necessary load details to cut down on questions.

Meet expectations to build relationships. Relationships in the freight industry lead to more volume, better rates, and less hassle. When a carrier does a good job delivering a load, brokers and shippers are likely to want to work with them again. When shippers and brokers offer great support and pay invoices promptly, carriers are likely to offer them capacity again.

In Conclusion

Load boards can be a great addition to the toolbox for any company in the freight industry, and when used properly, they have the potential to help save time and increase revenues.

Choosing and using load boards that meet your needs can help ensure success, and since they’re usually relatively inexpensive or free to utilize, they are definitely worth a shot to help grow a thriving trucking business.

Savvy carriers can use load boards to save time and money, especially if they gain access to a premium load board for free by becoming an Express Freight Finance customer.

The post The Power of Load Boards: A Comprehensive Guide appeared first on Express Freight Finance.

At the heart of this industry are the truckers who are continuously looking for the loads to keep their trucks on the roads.

How truckers find loads

There are a variety of methods that truckers can use to find loads to haul. They can also use a mix of the following methods to find the best pay-outs and preferred routes throughout the United States:

The #1 Way to Find Loads: Load Boards

A load board is the most widely used method to find a load of your choice and preference. There are hundreds of free and paid options for digital load boards with thousands of loads on the marketplace.

Both shippers and brokers can post available loads, and oftentimes load boards allow truckers to post about their equipment, route, and types of trucks. Truckers can also call the brokers for further information and rate negotiations.

What is a load board and how is it used?

A load board is an online marketplace that enables shippers and brokers to post available loads and find the right carrier for the job.

Think of it as a matching system, similar to a dating site, that allows the carriers to find the most profitable loads to keep their truck on the road and maximize their earnings.

With this online platform, carriers will typically buy a subscription to search for thousands of load options in real-time. You can also post your empty trucks along with other information, such as the type of truck(s) you have available.

Brokers and shippers can reach out to you with follow-up information or you can contact them directly for a posted listing of a load. A load board also allows you to communicate about the specific load and negotiate on price. Many load boards also help the truckers to check the reviews and credit scores of a particular broker or shipper.

Are load boards worth it?

Load boards are widely used in the US trucking industry to move freight across the country. With roughly 97% of carriers operating 20 or fewer trucks, load boards are certainly worth exploring. This is especially true if you’re just starting your own trucking business, are an owner-operator, or own a small fleet.

For New Owner Operators

If you’re a new trucker owner-operator, using a load board can help you grow your business and find new business partners.

The trucking business heavily relies on networking and relationships, whether that is with a broker, shipper, or fellow truckers. Load boards can assist you in expanding your network, establishing new relationships, and staying up to date with the rates, news, and the latest trends in the industry.

There are hundreds of real-time listings available on load boards you can choose from. It also puts you in control, as you can tell the broker about where you are and what your destination is to find freight along your preferred routes.

According to The Economist, an average truck driver drives 28% of their total mileage without a load on a return trip. Better networking with the brokers through a load board can significantly reduce this downtime and help you make more money with your truck.

Top 5 Load Boards

There are plenty of load board options in the market with both free and paid monthly subscriptions. We’ve compiled a list of the top five load boards with powerful features to find your next load.

Here are some of the best load boards for truck drivers, owner-operators, and brokers:

1. DirectFreight
   
   DirectFreight is both a trucker and broker-friendly load board packed with every feature you might need in the trucking business. It provides easy, location-based search options for loads as well as trucks.
   
   As an owner-operator, you can look at the credit score, bond, authority, and insurance information of a broker. DirectFreight also lets you store and send documents, show load bookings, and even see the average number of days to pay. Other useful features include weather reporting, text and email alerts, and audible app notifications to tell the carrier about newly available loads. It also provides integration with the transport management software provider TMW systems.
   
   You can get all these features at $34.95 per month. However, Express Freight’s MarketFIT users get access to DirectFreight Premium for free.
   
2. TruckStop
   
   Truckstop is known for its large number of registered brokers. Basic membership starts at $39 a month for the carrier and $99 for both the broker and the shipper.
   
   With a large community of brokers, shippers, and carriers, you can find loads quickly and easily. To unlock all of the features, you’ll need to purchase their Pro version with the real-time load board option for $149 per month.
   
3. DAT
   
   DAT offers a state-of-the-art live load board with multiple search options and filters to refine your search for a load.
   
   This load board also shows pricing details for each load, helping truckers negotiate a fair price. On average, there are over 800,000 new listings each day on DAT.
   
4. 123Loadboard
   
   123Loadboards is an industry leader for load board solutions, with over 50 million truckloads posted annually.
   
   In addition to a paid membership with unlimited load searches and live notifications, 123Loadboard offers a free load board app and a 10-day trial of its premium features.
   
   The app also offers comprehensive search options and reporting tools for truckers at a starting cost of $35 a month. With their highly-rated mobile app, you can find available loads anytime and anywhere.
   
5. Trucker Path
   
   With more than 800 brokers and 150k+ loads per day, Trucker Path provides a mapping and navigation mobile app for truck drivers.
   
   The free platform lets you check the broker’s credit score and find the closest truck stop, available parking, weigh stations, fuel stops, trip planning, and truck-safe routing. You can use the Trucker Path app or the web version to find the load of your choice.
   

When to use a broker vs. sourcing loads independently

Outside of load boards, you may be curious to source your loads through freight brokers. In short, freight brokers arrange for the transportation of freight for direct shippers.

With consistent ties to shippers and multiple load options, freight brokers can help kick start your carrier business. They also do the legwork and negotiation on your behalf with the shipper, which can help you focus on your job when you’re just starting or expanding.

Building a strong relationship with your broker is critical. As with any contract or agreement, it’s also important to set clear terms with your broker and look out for any hidden fees or charges.

Once you gain a certain amount of experience and industry knowledge and your business is already up and running, you can look for options other than a broker.

There are plenty of ways to find a load for your trucks outside of freight brokers, including freight factoring, becoming a government contractor, brokering your own deals, and networking with other small carriers or truckers for referrals.

Establishing a direct relationship with shippers

Hauling loads directly from the shippers (or customers) might sound tempting because you can save the commission of the broker. However, this also means it’s up to you to find, negotiate and sell to the shippers yourself. This process takes a lot of time and hassle to build relationships and negotiate rates with the shipper.

You also need to build relationships with multiple shippers to guarantee a load on your way back from the destination to prevent the dreaded deadhead miles.

Most shippers award the shipping contracts through bids which are generally available for larger carriers and fleet owners. Large shippers also require the Transportation Management System (TMS) systems with EDIs and APIs.

If you have a single truck or a small fleet, this might not be an ideal option for you.

Freight Brokers

Freight brokers offer their services to find and broker deals with the shippers and the carrier/owner of the fleet for a commission.

Relationship matters a lot in the trucking business. A good working relationship with the broker helps you find the best deals at any given place and time. Some of the large shippers also prefer to work with freight brokers because of their huge network of truckers and carriers across the country.

Digital Freight Matching Apps

Digital freight matching apps ease the process of finding loads with a set rate for each haul.

Drivers can accept the published jobs at a fixed rate without the hassle of negotiations. This process eliminates the need for back-and-forth negotiations, saving both parties time. The downside is that you may not earn as much as you would without the fixed rate.

According to a 2019 study by FreightWaves, carriers surveyed say that they only source 11% of their freight from freight matching apps.

Despite the rise and focus on Direct Freight Matching Apps, the most popular method for sourcing freight for carriers running one to three trucks continues to be directly from freight brokers, shippers, and load boards.

The post Top 5 Load Boards for Truckers in 2022 appeared first on Express Freight Finance.