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Factoring is the use of a financial institution set up and available to distribute funds based on each completed job you choose to give them.
 
The process is quite simple
 
You run a load, now you have signed bills that must be sent back to a shipper or broker that may take up to 45-60 days to pay you.
 
Instead you choose to send
your Bills
an invoice that says the shipper or broker is responsible for paying your company,
and an original copy of the rate confirmation for the job to your "Factoring Company" which will:
 
Issue you usually about 80-95% of the total amount of your bills
Will mail your bills, invoice and rate confirmation back to the shipper or broker
and will collect the check, cash it, take about 5% for their services e.g. of 1000.00 BOL they're paid about 50.00 bucks
and they send about 15% back to you in the form of a rebate check
If the shipper or broker is slow in paying they will call and do some of the coordinating to get the funds delivered as prompt as possible.

Conservation of Time

Here's a rule that all Truckers need to keep ever before them: The more you allow others to assume responsibilities for you that you should be assuming for yourself the more you're going to lose and be taken advantage of, period. That being said you still have to know the difference between conservation of time and resources.

Those that can not make that distinction are destined for some problems ahead, let me illustrate.

Once I run a load for a broker they have 30-60 days to pay me, I know how to wait 30-60days for my money, wondering if whether or not its going to get there, I know when I have to bother a friend or someone to take checks to the bank for me, you see, I know how to do that, but I chose not to, so I find a legitimate factoring service that can fill my real need. They will pay me like the next day and put it on a fuel card for me and chase down the money for me when it's slow coming in, all for a nominal fee. That’s conservation of my time, and it's worth it to me

Services Factoring:  Here’s part of a testimonial I sent my factoring company recently, I think it’ll fit just right in this spot. First of all, the reality of waiting 30 to 45 days sometime 60 days to get paid is almost too overwhelming for anybody, but even these brokers that offer a quick pay involves a separate contract with each brokerage all with different ways of doing business, different standards and fee structures, I'd just as soon become familiar with and lock in to one system. What's more, if I had to do the follow up on all these companies, I'd be a raving maniac and I'd probably drive some of them over the edge too; and besides all that, I'd never have time to run loads, but factoring relieves me of that whole stress, so I can focus on running the company. The Factoring Service I used was Eagle Capital Corp out of Tupelo Mississippi. They're the greatest and I think you'll like em' too.

Let's get to the real nitty gritty though, I'm sorry, but if I'm a broker and things are tight, I mean really tight, I'd rather get the loads that were factored paid before I pay on the loads that aren't factored, Why!!! Because there are companies like Twelve Oxen Transportation, that call their factoring company on every single broker they can, and if that broker has not paid that factoring company Twelve Oxen WILL drop off the load, and who knows it might be a great potential money maker for the broker.............You see, it's just basic common sense it's not at all complicated. If you're the lone ranger out there, waiting on some broker who a month later, can't even remember you did a load for him, you’re asking for frustration times ten.

Be carefule of the factoring company traps
 
If you factor through a reputable honest factoring company that is keeping all the cards on the table you should have no problem
 
Many factoring companies have resorted to blind siding the their customers. They get them in by paying them more up front but then they hit their customers with high transaction fees and volume fees, and so on, so in the end you end up losing more than if you would have settled for a company that might be paying out a little less on the front end but doesn't have all the hidden cost, and if your willing to wait for those rebate check it's amazing how they accumulate and form a kind of savings for you.
 
Another Trap. You are factoring because it's suppose to be saving you time, but if you have to encounter an answering machine and press fifteen buttons before you get a customer service representitive that factoring company is not respecting your time.
 
Time is money, and if the loss of time from poor customer service is offsetting your conservation of resources it's better to take the hit on the resources side. Time is so very critical in trucking, suppose you have to get through to your factoring company to check to see if the shipper or broker pays their bills on time or at all, and you need to do this quick and conveniently before you seal the deal? If you have to deal with long waits and prompts on the phone, your factoring company will be useless to you as far as checking out brokers and saving you time.
 
Another Trap factoring companies like to spring is they lock you in let's say a one year contract, if you want to get out of the contract they'll charge you ridiculous fees to get out, and the sad thing about it you've already sign to agree to it.
 
Another factoring Trap is that if your shipper or broker doesn't pay,  the factoring company will take back what you got prepaid on the run from the next run you factor. You should join a non-recourse factoring company. That means, if the shipper or broker is on the approved list of your factoring company, and they don't pay,  the factoring company won't come back and take the money they prepaid you on the run, they take the loss not you.
 
Another factoring Trap. Make sure your factoring company has a schedule for releasing the reserves on your invoices if they don't you might be waiting as long as a month for your rebate check after the broker or shipper has already paid the bill. If your factoring company doesn't pay you on time don't stick around they are wasting your time and your hard earn money, find one that will respect your time and respond to your needs and serves your business.
 
 Another Factoring Trap. If you are due moneies from a broker that are not being factored,like let's say a truck ordered not used, a lot of times the broker has to send the check through the factoring company "once you initiate factoring the brokers have to send all checks through your factoring company" . The problem is these factoring companies get a thousand check a day, write the check number down and just go to the bank and cash them all. The only way they know which check goes where is they line up the check number with the paperwork sent to them from you the trucker, so if you the trucker don't decide to factor and don't send paper work to them, they just keep your money. The company should be able to quickly identify checks that are not being factored and willingly and expeditiously send that check to you, not hold it until you come looking for it, "if" you come looking for it.  This way the customer doesn't feel penalize for not factoring.

I'm glad I factored, just make sure "with any factoring company" if you don't factor any checks coming to you from the brokers that you follow them up and make sure they are credited to you. Factoring made my operation run smooth and save me time and money.