Glossary
Factoring
Selling your unpaid invoices to a third party at a discount in exchange for immediate cash.
Trucking factoring companies advance you 90-97% of the invoice value the same day or next day, in exchange for a 3-10% fee. They then collect from the broker or shipper directly. Factoring solves cash-flow problems when you can't wait 30-60 days for payment, but the fees are real cost. A 4% factoring fee on $400K of annual revenue is $16,000/year — that's worth modeling against the alternative of waiting for the payment to clear.
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