Blog

Common Freight Factoring Terms Defined

By 12.09.13February 22nd, 2022No Comments
Common Freight Factoring Terms Defined

If you’re new to factoring, you might come across terms that you’re not familiar with. It’s important that your factoring company explains how factoring works and what each term means. To make it easier to understand the process, we’ve pulled together a list of common factoring terms and definitions that we think you’ll find helpful.

Factoring: A process where a factoring company purchases your company’s invoices then pays you a percentage of that invoice quickly

Non-Recourse Factoring: Factor assumes credit risk on invoices that aren’t collected within a certain number of days

Recourse Factoring: Customer assumes credit risk on invoices that aren’t collected within a certain number of days

FMA (Factoring Master Agreement): A document explaining terms and conditions of the factoring agreement

BOL (Bill of Lading): A document used in the transportation of goods issued by the carrier

Proof of Delivery (POD): A document that shows goods were received

Reserves: The portion of the invoice that the factor has not yet advanced to the client. Carrier receives most of the reserve amount once the invoice is paid

Working Capital: A financial term measuring liquidity available in a business

Accounts Receivables: Money owed to a business by its clients

Debtor: An entity that owes a debt to another entity

Advance: An upfront lend of a certain amount of money

Freight Broker: An intermediary between a shipper and a carrier

Shipper: Party responsible for initiating a shipment

Carrier: Party that transports goods Uniform Commercial Code

(UCC): The Uniform Commercial Code is a set of standardized legal guidelines defining how sales and commercial transactions are to be carried out in the U.S.

We hope you find these definitions useful when considering or discussing factoring services. If you’d like additional information about factoring or how it works, contact one of our knowledgeable factoring consultants and they’ll walk you through the process. Continue to check back on our blog for more factoring tips and info!

eCapital Corp. is committed to supporting small and middle-market companies in the United States, Canada, and the UK by accelerating their access to capital through financial solutions like invoice factoring, factoring lines of credit, asset-based lending and equipment financing. Headquartered in Miami, Florida, eCapital is an innovative leader in providing flexible, customized cash flow to businesses. For more information about eCapital, visit eCapital.com.


More Great Reads

Revolving Line of Credit (RLOC)Blog
05.11.22

Strengthen Your Trucking Company’s Financial Position with a Revolving Line of Credit

If you're a business owner in trucking, whether you're managing a fleet or hauling loads yourself, there's a powerful financing tool available that is well worth becoming familiar with -…
Blog
04.20.22

Are You Better Off Running Your Own Trucking Company?

From an opportunity perspective, the freight industry is experiencing one of the best periods in its history. The American Trucking Association’s U.S. Freight Transportation Forecast 2021 to 2032 shows a strong rebound…
Blog
01.13.22

Thinking about Flat Fee Factoring? Make Sure Your Deal is Simple and Flexible

Freight transportation is a fast-paced industry requiring constant action to source loads, deliver freight and maintain operational efficiencies. To keep up with these and other continuous demands, it can be…