Freight Factoring: Pump Up Cash Flow for Customers with Fuel Rebates
The adage, “time is money,” is more valid today in the freight industry than ever. To survive, motor carriers and freight brokers must reduce days sales outstanding (DSO) to accelerate cash flow and outlast this prolonged freight recession with runaway inflation. Accounts receivables never age gracefully, especially when revenues are flat or declining. Freight factoring companies eliminate payment delays and now can also help customers maximize fuel savings. In today’s market, freight factoring companies offering integrated services can do more than accelerate cash flow. They can help customers reduce their second-largest operating cost. This article shows how to gain this advantage by offering a plug-and-play fuel discount program.

Squeezed Cash Flow and Profits

In this environment, liquidity and efficient cash flow management are essential to stay afloat. Freight factoring is in high demand, yet many fleets and freight brokers also want partners to help them stem the tide of rising costs. This year, freight rates are only slightly above the lows of late 2023. Stagnant revenues and rising costs are compressing – if not altogether erasing – profit margins. According to a June 2024 Operational Costs report by the American Transportation Research Institute, this year’s drop in fuel prices masks some harrowing statistics: These 2023 figures underscore the ongoing financial pressures on carriers and brokers, who must pay for these and many other expenses long before invoices get paid. This accentuates the need to accelerate cash flow.
  • Excluding fuel, fleet operating costs increased 6.6% to $1.716 per mile in 2023.
  • Driver wages increased by 6.6% to $0.967 per mile.
  • Equipment payments jumped significantly to $0.36 per mile.
  • Maintenance costs held steady at $0.202 per mile.

The Expanding Role of Freight Factoring

Freight factoring companies offer a lifeline to carriers and brokers by providing immediate cash from purchasing invoices at a discount, which also reduces their administrative costs by taking over billing and collections. Modern freight factoring companies go beyond these traditional services by leveraging technology and innovative programs that deliver additional value. Below are several ways to differentiate yourself in a crowded market:
  1. Intelligent Automation Implementing cutting-edge automation tools with system integrations and easy-to-use web portals can streamline the flow of customer information and documents. Accelerating proof-of-delivery receipts and other critical data dramatically reduces the time it takes to get money into their hands.
  2. Flexible Factoring Options Spot factoring allows clients to choose when and where to use borrowed funds for freight transactions at the transaction level. This flexibility enables carriers and brokers to optimize their cash flow strategies based on their specific needs and circumstances.
  3. Rapid Onboarding and Approvals Thanks to advancements in software-as-a-service (SaaS), factoring companies offer customers powerful technology for rapid access to cash. For example, new clients can be quickly approved after signing a contract to begin submitting data and documents for loads to accelerate payments.
  4. Fuel Rebate Programs Saving the best for last, one of the most exciting developments in the freight factoring space is the introduction of fuel rebate programs. These programs offer a win-win situation for factoring companies and their clients. Here's how they work:
    • Factoring companies offer clients access to a fuel discount program branded under their name. The program includes fuel cards and an online portal to manage them. This helps clients save money and serves as a powerful retention strategy.
    • Small carriers and independent operators can access discounts typically reserved for large fleets, leveling the playing field.
    • As carriers fuel up at locations within the payment network, factoring companies can generate additional revenue by keeping a share of the discounts at the pump.
    • Through these programs, carriers can save up to $500 per month per truck on fuel costs.
    The advantages of the fuel rebate program that a freight factoring company offers its customers include electronic purchase controls, which include:
    • Fuel price mapping: Advanced tools allow fleets to identify the best fuel prices along driver routes and alert managers to fueling events and missed savings.
    • Easy card management: Card limits can be set at dollars or gallons. Virtual cards can be issued for immediate use.
    • IFTA data automation: Integration with ELDs simplifies data generation for International Fuel Tax Agreement (IFTA) reports.

Being a Comprehensive Solution Provider

Freight factoring companies offering fuel rebate programs become more than financial service providers. They are essential business partners for small fleets and freight brokers to survive and thrive in a challenging market. Besides getting timely, consistent payments, your customers will maximize fuel savings. This two-pronged approach will help you better retain clients while creating a new revenue stream.

Enter the New Era of Factoring

Without differentiation, factoring companies have challenges retaining carrier customers who may easily switch to a competitor offering slightly better rates or terms. Load Connex has made it easy for factoring companies to add cutting-edge technology, fuel rebate programs, and value-added services to succeed in an increasingly competitive landscape. Our fuel rebate program lets you offer carriers significant discounts at thousands of truck stops nationwide while earning a percentage on every purchase they make. You can fund fuel purchases for customers as part of your factoring agreement. You can also provide the program to your broker customers so they can offer it to their carriers. Setting up carriers and managing the program is quick and seamless. Contact Load Connex today to learn about our innovative and rewarding fuel rebate program to save your customers money and boost your revenue.
Freight Factoring: Pump Up Cash Flow for Customers with Fuel Rebates The adage, “time is money,” is more valid today in the freight industry than ever. To survive, motor carriers and freight brokers must reduce days sales outstanding (DSO) to accelerate cash flow and outlast this prolonged freight recession with runaway inflation. When moving your freight, just keep it simple For shippers, navigating today’s trucking market has never been more challenging. Demand for goods is soaring. Truck capacity is ultra-tight and will continue that way due to an acute shortage of commercial truck drivers. Spot-market rates have spiked, and are now being followed by double-digit increases in contract rates. In addition, properly vetting the available carriers--a process known as on-boarding--can be complex and time-consuming. When building a freight strategy, put information technology first It has long been said that the information about a shipment is just as important as the shipment itself. Technology plays a central role in everything. From planning the load, to booking the driver and truck, to monitoring the shipment’s status all the way to the end customer, to spotting and correcting unexpected problems (known in the trade as exceptions), and to tracing the source of persistent service issues, it is impossible to succeed in the 21st century freight business without robust information technology tools. Boom or bust: why dynamic RFPs are better for shippers and carriers As the last year has shown, the time gap between cycles of boom and bust in the freight market has narrowed. This reality has led shippers to find new strategies to stay current with market conditions to more effectively buy transportation services at the best possible rates. During 2020 and 2021, shippers had to pivot from traditional request for proposal (RFP) processes. Many have found success with a dynamic RFP that enables them to work more closely with a limited number of preferred carriers to obtain lower rates on a consistent basis.
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