Although it works like a recourse based factoring product, Freight Receivable Financing is an Asset Based Lending program provided by a lender to Freight, Transportation, or Trucking related companies. It is a flexible approach to factoring, whether recourse or non-recourse, that enables a Transportation-related company to achieve better-priced financing than typically offered by traditional factors. This product works as a conventional form of Accounts Receivable Financing. Freight Receivables Financing provides an A/R based Revolving Business Line of Credit for Freight or Transportation companies by using all or most of the Freight Invoices as collateral for the line. Freight Receivables Financing enables Transportation-related companies to have flexible access to working capital when needed, without having to sell their Accounts Receivable Invoices in a factoring arrangement for up to 85% of their invoices face value. 

Freight Receivable Financing, like with most A/R based products are funded using two payments: The Advance and The Rebate.

The Advance Stage

Whether a company provides Transportation, assembly, packaging, or warehousing, etc.

The advance stage is provided to your company as soon as the services have been provided or delivered and accepted by your client for which an invoice is provided. A lender will validate everything about the Invoice and then release funds. The advance rate is based on a percentage of the Invoice and ranges from 70% to 85% of the face value.

The Rebate Stage

Once the Transportation client pays the Invoice, the lender will remit the remaining percentage balance. The finance fees are reduced from this payment.

The Advanced Stage:
Once a Transportation-related company is  approved for Freight Receivable Financing, the company is free to submit invoices for funding pretty much immediately. This way, they can generate the capital that allows them to convert their idle invoices into liquid funds as needed. 

With Freight Receivable Financing, a Transportation-related company maintains its own collections relationship with its customers. For the lender and the borrower to be able to track when customers are making actual payments. Transportation-related companies must agree to divert payment for all submitted invoices into a lockbox of sorts, that is duly monitored by both parties. Every lender will have a professional and efficient invoice management process, to follow up and to help ensure that your customers are paying following the invoice terms. Along with a timely detailed web-based reporting, that can check to see who has paid and who has not 24/7.

Borrowers will then receive their  A/R based revolving business line of credit in exchange. This credit line transportation-related can draw from as needed for a fast and flexible source of capital. The maximum amount of capital you can draw from is mainly determined by the amount offered by your receivables leveraged. With a Freight Receivable Financing A/R based revolving business line of credit, you don’t have to use what you don’t take out. Instead, draw only the amount the company needs, and the rest will still be available to use as needed. All while agreeing to point the remainder of the client pays to the lockbox until your customer pays their Invoice.

The Rebate Stage:
Customers will not be notified if you use Freight Receivable Financing, making this the ideal choice over non-recourse for Transportation Factoring business owners who wish to maintain their collection relationship with their clients, to protect their reputation.

Once the final invoices are paid, the lender will release the remainder back to your business, minus a financing fee – depending on your contract terms typically 1.5% for every 30 days; the Invoice is outstanding. With Freight Receivable Financing, a Transportation-related company is ultimately responsible for their unpaid invoices. Recourse financing fees start as low as 1% for every 30 business days. This product is best for more substantial scale invoices for clients with excellent payment history. Knowing if your clients are in good credit standings can increase the likeliness of payment but will not guarantee it. Most lenders will offer credit checks to raise your awareness of your client’s creditworthiness. 

Instead of a Transportation-related company having to wait up to 60 days or more to get paid by their clients, a company can now get an immediate advance against their invoices. These funding vehicles will allow businesses to maximize their cash flow and improve their position by taking out an advance based on their Freight, Transportation, or Trucking related invoices. Your company could get quick liquidity, while a lender holds the Invoice(s) and waits for payment. The transaction can be completed as soon as your client pays for the services in full, or it can replenish, and the process can start over again.

A/R based Lockbox Account  

What Is Lockbox Banking?

Lockbox banking is a service provided by banks to companies for the receipt of payment from customers. Under the service, the payments made by customers are directed to a particular post office box instead of going to the company. The bank goes to the box, retrieves the payments, processes them, and deposits the funds directly into the company’s bank account.

How Lockbox Banking Works? 

For businesses that receive a large volume of payments or large-denomination checks accompanied by remittance documents, a lockbox arrangement can streamline collections and payment processing. Utilizing advanced lockbox technology, banks have established multiple communication hubs for businesses to use to receive payments and deposits.

A company creates a post office box to accept payments from customers. The bank couriers process the day’s deposits and send it to its processing center. The business’s remittance documents are scanned, payment information is captured, and clearing updates are transmitted to its accounts receivable. Each night, the business’s lockbox data is backed up for secure storage and easy access. 

A Freight Receivables Financing A/R based Revolving Business Line of Credit enables your trucking business to have flexible access to money when needed rather than selling your accounts receivable in a factoring arrangement.

Our flexible approach to factoring, whether recourse or non-recourse, enables your Transportation company to achieve better-priced financing than typically offered by traditional factoring. 

This AR factoring is a financing option with greater flexibility and a lower cost of capital compared to standard small business loans.

Recourse freight factoring may also be a good option if your clients are reliable and pay in a timely fashion. 

The “revolving” nature of the Freight Receivable A/R facility allows a Transportation-related company to add capital back into the credit line, where it gets added back into your total maximum. This capital can then be withdrawn once again if needed.

Improved Credit Score in addition to the debt-free cash flow, there are potential benefits for your company’s credit score, too. With timely funding, you can stay on top of your payables.

This is a viable alternative to Bank Loans, many businesses, from startups to mature enterprises, do not have the collateral or credit profile to take out a loan. Some companies are not interested in making monthly loan payments. In either case, Freight Receivable Financing is a great option.

Ease of Process, the application process is simple compared to a bank loan. And once you have been approved and set up, the ongoing funding process is simple. Your Freight Receivable A/R based Revolving Business Line of Credit can quickly grow as fast as your company.

Collections control, unlike with Transportation Factoring Freight Receivable Financing, will not be buying your invoices, only providing a recourse based advance against the invoices and therefore allowing Transportation-related companies the ability to maintain the collections aspect of their sales cycle.

Less Stress When you are self-assured that you can pay your bills and meet payroll on time, it is simpler to focus on the operational aspects of your business, leading to sustained success.

Growth Opportunities increased, as cash flow allows you the potential to grow and expand your business as soon as the opportunity arises. You don’t have to wait for a bank to approve a loan to make that quick purchase—because you already have the cash you need.

Funding is available to Startups and Higher Credit Risk Companies because Freight Receivable Financing will look to the strength of your customers, as well as your company’s financial history.  A/R financing is perfect for startups, high growth businesses, or companies that experienced some financial challenges.

Count on professional cash management services when you work with Freight Receivable Financing, you can set it and forget it. The cash management programs will take care of all the paperwork, processing, and collections. We serve as an extension of your company so you can concentrate on the essential aspects of growing your business. 

Approval is quick and only takes a few days. The most important qualifier for getting approved for Freight Receivable Financing is a customer base with a strong credit history (with a record of paying bills on time). 

The second most important qualifier is that your invoices are free and clear, meaning you do not have any liens or loans that use accounts receivable (A/R) as collateral. 

SUBMISSION PACKAGE

Signed Application

6-12 Most Months of Business Bank Statements

UNDERWRITING DOCUMENTS

2 Most recent years of Business Financials

Including Profit & Loss and Balance Sheet

2 Most Recent Years of Business Tax Returns

Copy of Most Recent 941 Filing

Full Aged AR Reports with Detailed Payer Information by Insurance Provider

Accounts Payable Aging Summary

The owner (s) Personal Financial Statement
Company Debt Schedule

Proof of Ownership

To be approved by transportation factoring companies, you’ll need to provide the following documents along with the complete an application and business financial documents requested above:  

• • operating authority
  • proof of insurance
  • Articles of Incorporation 
  • A current customer list.