Multi-load trucking can be a profitable field because many trucking company owners avoid it. The competition is lower because some owners feel they lose too much money when drivers have to make more than one stop delivering a shipment.
The reality is that multi-stop truckload shipping can be a profitable market, providing you factor the cost of stops and driver breaks into your rates. The other reason it’s often avoided is that managing multi-load payments is complex. You have one trailer with multiple loads from different clients, and you have to keep track of each one to ensure it’s delivered to the right location and within the allotted time.
The other area of complexity is that you’ve done a lot of work, and payment cycles may not be as flexible as you’d like. Suppose you just delivered four loads for different clients on one trip and that’s a lot of money that’s due. However, you have four invoices that are out there and no one is paying you yet. You have wages, bills, and fuel to pay for, and waiting weeks or months for these payments is a hassle. Freight factoring that specializes in multi-load payments is the best way to ensure you get paid when you need the money.
How Factoring Works in Multi-Load Payment Scenarios
Freight factoring starts when you discuss the arrangements you need and sign a contract. After this, when you deliver loads, you submit the completed bills of lading to the factoring company to be processed.
A freight factoring company essentially purchases the rights to your undrafted invoices. You get payment now, minus a factoring fee, and the factor drafts and sends the invoice to your client. When your client eventually pays, the factor gets the money they paid you. Because you have multiple loads that were delivered, you have multiple invoices to generate. Avoid the hassle and have a freight factoring company generate, send, and keep track of these different invoices.
You do pay a fee for this service, but you have to consider what you lose if you don’t get paid for weeks and don’t have any cash flow to cover an emergency expense, such as a broken hitch. If you take one truck out of service, you lose a lot of money until your client eventually pays.
Now, imagine that same scenario. You decide to use a business credit card to cover the expense until you get paid. If you can’t pay the entire amount before the due date, you start building interest changes. Interest on a business credit is much higher than freight factoring fees. You lose potential revenue. Freight factoring prevents that loss.
How Does Freight Factoring Help?
Several benefits exist when you use freight factoring services. You get a lot more from it than immediate payment of money that’s due.
Easier Scalability
Freight factoring is flexible and meets your needs. You might have a client that pays on time, so you don’t need to factor that invoice, but there’s another client on the multi-load run that you’ve not had a lot of experience with. Invoice those clients you don’t know as well to ensure you get payment.
Plus, freight factoring has additional benefits like unlimited free business credit checks. You’re able to check the creditworthiness of a client before you agree to add them to a multi-load.
You can also add services like fuel discounts, business debit cards for your drivers to carry, and competitive business lines of credit that make it easy to grow your business. This can all help with the growth and management of your trucking company.
Less Bookkeeping
Paperwork is a hassle. Even if your accounting and invoicing are done on a computer, you might have clients who prefer a printed invoice mailed to them. You have to upload or enter the bill of lading information once your driver returns with it or sends it to your office. You need to verify the information uploaded or was entered correctly. Then, you have to generate all of the invoices from that information.
Once clients have the invoice, they may not pay immediately. If you’ve extended NET 30 payment terms, they have a full month to pay. You need to keep checking that the invoice is paid. If they don’t pay on time, you have to find out why and when payment will be remitted. It’s a lot of work for your office staff.
With freight factoring, the factoring company handles all invoicing. If payments aren’t received, the factor makes the calls to find out why. This frees up so much time. Your office staff has the time to focus on effectively planning multi-load routes, marketing your trucking services, and reaching out to your existing clients to ensure satisfaction and make sure there are no questions or additional services needed.
Protection Against Financial Loss
With money coming in long before you’d usually get it, you pay bills on time. You avoid dings on your credit report for late or missing payments.
Freight factoring also helps against loss and bad debt. When you select non-recourse factoring, you don’t have to repay the money you received if your client never pays. Imagine if you invoice a client and that client shuts down before paying you. You have bills to pay, but you’re not getting the money you were expecting.
With a non-recourse agreement, you’re protected. You already have what was owed. The freight factoring company takes the loss. It’s like insurance against unpaid invoices.
Stronger Cash Flow
As a business owner, you need a strong cash flow to keep up with bills, wages, insurance, truck maintenance, unexpected repairs, and gas. You need to cover renewals of any licenses or certificates. Failure to keep up with these expenses can temporarily shutter your business or cost you valuable workers.
When you have a strong cash flow, these expenses aren’t a problem. You have money coming in when you need it, and you’re avoiding late fees and high interest rates. This enables you to invest in improvements or expansion.
Choose an Expert in Multi-Load Payment Arrangements
When choosing a freight factoring company, make sure you find a company with experience in the trucking industry. A generalized factoring company lacks the specific insight needed to ensure you’re getting competitive fees and services that help your company grow.
Are you ready for better management and processing of your invoicing and incoming multi-load payments? Saint John Capital helps trucking companies get paid immediately through a variety of freight factoring options. Let us know what you need and we’ll help you build the best freight factoring arrangement.
