Payors cannot restrict the assignment of proceeds and are subject to double‐payment liability if they choose to ignore proper notification. Remember, the assignment of pay proceeds is separate and distinct from the assignment of services or other responsibilities in a legal contract (i.e., Broker‐CarrierĪgreements). The ability to assign payment obligations (accounts) from theīroker (account debtor) to a factor (assignee) was a purposeful and intentional provision that the UCC drafters identified to provide businesses with opportunity to raise workingĬapital. Invoice factoring brokers code#The Uniform Commercial Code (§ 9‐406) outlines the business and law underlying the invoice factoring industry. What is a Notice of Assignment and do Freight Brokers need to acknowledge them?Ī. The style of a carrier’s factoring contract should have no impact on the freight broker. Often misunderstood, non‐payment for legitimate disputes (such as shortages, claims, late delivery, etc.) remain the responsibility of the client regardless of contract form. Non‐recourse factoring allows companies to sell their invoices in a style in which the factoring company assumes the credit risks. Recourse means the factoring client is ultimately responsibility for the payment of the invoice. What is the difference between recourse and non‐recourse factoring? And, how does it affect me?Ī. The factoring industry has come a long way, too. Many of the top factoring companies offer online credit services, fuel purchase programs, equipment and insurance financing and mobile technology applications. The quality of factoring services has improved as well. In fact, factoring fees are typically at or below the same pricing which many brokers charge for quick pay. As a result of increasing competition, carriers are solicited daily with factoring offers of high advance rates (the percentage of the freight bill advanced at time the invoice is sold or “factored”) coupled with factoring fees that are a fraction of what they were 10 years ago. And, why not? The collectability of a freight bill is terrific. Lots of new capital has flooded the commercial finance sector, and many new factoring companies have entered the transportation space. At Triumph Business Capital, we’ve processed carrier payments for over 500 freight brokers, and our experience is consistent with those reports. Over the past 10 years, transportation intermediaries are directing more and more of their carrier payments to factoring companies ‐ anecdotally, we hear as much as 80%. Invoice factoring has been around for thousands of years and can be traced to the 18th century B.C.
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