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How Much Do Freight Factoring Companies Charge & How Do Fees & Payback Work?

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Financial strains are hard to deal with, even in the best of times. But with current levels of pressure, disruption, and uncertainty plaguing the shipping and transportation industry today, financial stresses are higher than ever before. Many fleet drivers and trucking company managers are turning to freight factoring services for a helping hand during these challengings times. But there is something that keeps many back from taking full advantage of this fantastic service: how much do freight factoring companies charge?

First and foremost, if you are on this article, you may ask, what does BasicBlock charge? Glad you asked!

  • We buy invoices at a flat 2%. You get paid instantly while we chase down the payments.
  • Signing up takes less than 15 minutes; just hit the “Get Started” button on BasicBlock.io.
  • Then, just scan the invoice you want to sell with our user-friendly app.
  • No contracts or hidden fees. Ever.
  • Manage your cash flow and expenses with predictable payments.
  • We get drivers paid faster. Period!

The Importance of Cash Flow and Better Financial Stability in the Trucking Industry

Of all the things truckers have to worry about and juggle day in and day out, cash flow is among the most vital and most challenging. Truckers must start thinking more critically about maintaining their cash flow as it is the one aspect of business management that directly impacts when, how, and where they can grow and expand. Partnering with freight invoice factoring companies can make it easier to monitor cash and asset and prepare more accurately for future trends and pressures.

Drivers considering factoring services to boost their financial standing must answer how much do freight factoring companies charge for their services and what impact they can have? As reported by Forbes, “According to The Trucker’s Report, the average annual cost of operating a commercial truck ends up around $180,000, with the National Private Truck Council reporting $2.90 as the average per mile operating cost…The American Transportation Research Institute reports that repair and maintenance costs have increased 24% from 2012. These costs are only expected to rise more with a high demand driven by the pandemic and supply chain crisis.” 

Answering how much do freight factoring companies charge and then working those expenses into business structures makes it easier to adjust for outstanding invoices and accounts receivable. Reaping the benefits is more accessible for small freight shippers today with these services to help them survive these challenging times.

How Much do Freight Factoring Companies Charge For Their Services?

Partnering with a factoring company can make cash flow management easier, even when the fees, interest charges, and other accessorials get factored into the equation. Addressing the question of how much do freight factoring companies charge is best done by looking at a real-world example:

A billing invoice drafted for a total amount of $10,000 is available. A freight factoring company agrees to take on that debt and track down payments on behalf of the owner-operator. They will add on a service fee that usually can range from 1-3% or as much as 5% in some cases. So, assuming a 3% service charge gets tacked on, the total value of the payment they will be giving comes in at $9,700. That $300 is the cost of getting the factoring service, though it is unimportant to note that each company offers different benefits and can have multiple rate fee brackets and factors that can come into play.

How do Payments Vary When Working With Freight Factoring Companies?

The question of how much do freight factoring companies charge can be challenging to unravel on your own. Discussing terms and details in-depth is essential to getting the best rates and the services that will make growth and stability easier. With this in mind, here are a few things that can come into play when looking at the costs, fees, and regulations for this sort of factoring provider service:

  • Most shipping companies are required to meet a minimum credit score determined by the factoring company before they can be given a contact as a way to judge risk level.
  • There is frequently a waiting period involved when a trucking company goes to get their first freight factoring loan as it adds another layer of protection for them.
  • The freight transportation company has to have a minimum of 90 days of profitable operations, though some exceptions can be made with additional precautions in place.

There can also be several additional qualifications put in place by individual factoring companies that will need consideration by trucking companies and drivers to secure financial backing.

Get Financial Help During These Uncertain Times by Partnering With BasicBlock

Knowing how much do freight factoring companies charge and how that impacts budgeting and financing will set the stage for future company and driver plans. With the proper financial backing and access to available and fluid assets, it becomes easier for smaller trucking fleets and companies to keep up with the big players and carve out a niche. 

Many medium-sized shippers and owner-operators across nearly all markets face the challenge of managing cash flow and keeping up with current levels of recovery and growth. Overcome these challenges today by contacting BasicBlock to get started with the fright factoring services you need.

Brett Byman

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