As a freight broker, you are often faced with competing demands for your money. On one side you have commercial shippers that want to pay your invoices in 30, 60 or 90 days and on the other hand you have motor carriers that want to be paid immediately. This situation puts the broker right in the middle.
Obviously, if you have the cash flow you can pay the carriers immediately and simply wait for your clients to pay. If you don’t have the cash flow or if your freight business is growing quickly, this situation could lead to cash flow problems as well as unhappy motor carriers.
Freight Factoring can improve you cash flow instantly as well as improve the customer service you are able to offer both commercial shippers and motor carriers. Here’s how factoring can improve your customer service and client relationships:
- Take on more loads: You could unknowingly be damaging your relationship with existing clients because your are unable to take on more loads and new customers due to cash flow issues. When you partner with a factoring company, you will receive upfront payment for your invoices which will in turn enable you to take on more loads and new clients.
- Work with better quality clients: While your business might be offering a great customer service already, relationships can quickly turn sour when you discover that some clients don’t pay invoices according to the agreed upon date or that they weren’t creditworthy to begin with. Factoring companies review the credit quality of your new clients as well as your existing customer base, which will help you to determine which clients have good payment habits and enable you to only work with the best clients.
- Remove yourself from the collection process: A factoring company will handle the entire collection process for you. They usually have a team of highly experienced and professional collection agents that will do all the calling and administration involved with receiving payments for you. This allows you to focus on your business while the factoring company handles the collections.