Freight Factoring: Are Monthly Minimums Required?

Freight Factoring: Monthly Minimums

Are Minimums Required?

Factoring is a labor-intensive industry with large carrying costs. In order to operate profitably, the factor calculates each trucking company client’s expected sales volume to determine rate thereby generating profitable revenue. This is common practice which almost all factoring companies adhere to. However, the terms of contracts that support this principle is where factoring companies can differ greatly. A majority of factoring companies require a minimum of sales volume from their clients to ensure each relationship is profitable. This creates a strain on the trucking company to meet the monthly quotas set by their financial partner. As seasonal fluctuations occur and economic conditions change, trucking companies can struggle to meet these targets. This in effect negates the convenience and ease of use that freight factoring should provide.

Look for:a factoring company that does not require factoring a specified amount of invoices every month.

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