Factoring guide
Quick pay vs factoring
The short answer
Quick pay is a single broker paying you early on their own loads, usually for a fee. Freight factoring works across your customers: a factoring company buys your invoices, pays you right away and collects from the customer. Quick pay only helps with brokers who offer it; factoring covers every customer you choose to factor.
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How quick pay works
Many brokers offer to pay faster than their standard terms in exchange for a fee, usually taken off the invoice. Each broker sets its own terms, fee and process, and it only applies to that broker's loads.
Shippers, elevators, plants and private customers often do not offer it, so on a lot of bulk and direct freight it is not an option.
How factoring works
You haul the load and send the paperwork to the factoring company, which pays you and then collects from your customer. With Smart Freight Funding, loads submitted by 11 AM CST, Monday through Friday, are paid the same day, and loads submitted after 11 AM are paid the next business day.
Because the factor collects, the invoicing and the follow-up calls come off your plate as well.
Can you use both?
Yes, on different customers. With Smart Freight Funding you factor customer by customer, so you can take quick pay from a broker who offers a good deal and factor the customers who do not. Once you factor a customer, that customer's loads come to us, so you would not use their quick pay at the same time.
| Quick pay | Factoring | |
|---|---|---|
| Who pays you early | The broker itself | The factoring company |
| Which customers | Only brokers who offer it | Any approved customer you choose to factor |
| Terms and fees | Set by each broker | One set of terms across your factored customers |
| Invoicing and collections | You still handle them | The factor handles them |
| Credit checks on customers | Not included | Included before you factor a customer |
Common questions
Is quick pay cheaper than factoring?
It depends on the broker's fee and the factor's terms. Compare the total cost on the same invoice, and count the time you spend invoicing and chasing payment.
Does factoring require a contract?
Some factoring agreements do. Smart Freight Funding has no contract, no notice period and no monthly minimum.
Plain terms, in writing.
No contract, no monthly minimum, and you choose which customers to factor. The application takes a few minutes.