Liens and Freight Factoring?

If you signup to use a Freight Factoring Company to process your Rate Confirmations, a.k.a. your Invoices, that Factoring company will 100% put a Lien on your personal-name, and on the name of your business. But don't freak out, every single Factoring Company does this and it's called a UCC Lien, Uniform Commercial Code... Let me explain why...

If you're a Trucking Company and you're going to use a Freight Factoring company to process your invoices, and I recommend that you do, that Factoring company is going to buy your Invoice (rate conformations) that show a job has been completed. The load was picked up and delivered and the contract for that job has been fulfilled and confirmed and marked as completed. When using a Freight Factor the Trucking Company is getting an advance on the Invoice, getting paid by the Factor the day of delivery so the Trucking Company doesn't have to wait to get paid 30 days after delivery to help speed up their cash flow to help with operating expenses to keep the business running (Fuel, Insurance, Driver Pay, Maintenance, Etc).

Think about it as your Rate Confirmations are I.O.U.'s and If I was going to buy someone else's I.O.U. I sure as hell am going to make sure that no one else will have the ability to swoop in and collect on the I.O.U.'s that I, a Freight Factor, am buying from a Trucking Company. So... the Factoring Company that you're working with and that you have signed a contract with wants to make sure that IT'S going to 100% get paid in 30 days on the Rate Confirmations that it's buying from the Trucking Company. SO... to legally secure that the Factoring Company will be paid for going out on a limb and paying the Carrier today and the Factoring Company getting paid tomorrow (a.k.a. 30 days later) the Freight Factor puts a lien on the owner(s) of the Trucking Company and a lien on the Name of the Trucking Company as well. The Lien will state the following "Factoring Company ABC has a lien on Trucking Company XYZ For All Accounts Receivable." Meaning... Accounts receivable are the funds that customers (Brokers) owe the Trucking Company for products or services that have been invoiced (Loads For Payment a.k.a. Invoices / Rate Conformations).

This lien is nothing to freak out about, it's a lien to protect the Factoring Company to make sure they are going to get paid on buying all of your I.O.U.'s (Rate Conformations) so they will 100% get their money back on the advance they provided the Carrier for the job (load) they delivered and completed. This UCC Lien doesn't mean you can't buy a new car tomorrow. This lien doesn't mean you going to have a negative mark on your credit score... no no no. This Freight Factoring Lien only applies to the Trucking Company's Accounts Receivables for loads that they deliver. If you do QuickPay on a load that's fine and the Freight Factor won't care. If your customer pays you once a week and you don't need the Factoring Company to process your loads that's also fine. The lien is used to apply to Brokers who take 30 days to pay after the load is delivered and completed. 

In terms of understanding the process... What if the Trucking Company Says... "OK so how does the Broker now know I'm going to use a Freight Factoring Company to Process This Load?" Simple... it's called a Notice of Assignment (NOA) and it goes hand in hand with the UCC Lien. This is a simple Letter that the Factoring Company will send to Brokers whose Invoices/Loads you're choosing to get Factored/Advances on. The NOA Letter informs the Broker in writing that the Accounts Receivable for payments for Load# 1234 have been redirected from the Carrier getting paid in 30 days to the Freight Factor now being the "Party" that will be paid in 30 days when the payment is due. This way the Broker doesn’t pay the Carrier because again the Factor already paid the Carrier on the load. Now the Freight Factoring Company needs to be paid because they are the ones who are waiting to get paid in 30 days not the Carrier waiting. When the Carrier sends the Rate Con, BOL and POD over to the Freight Factor to get paid the day of the delivery the Factor will then review that paperwork and email the Broker the NOA so the Broker knows where to send the payment on day 30. 

Said another way. . .

Yes, the Lien is for every Carrier in the Trucking Industry that uses a Freight Factor to process their loads for payment. The technical terms of the UCC Lien are pretty basic… As a Carrier, the Factor is going to process your payments, the Rate Cons, up to $100,000 monthly as a revolving 30-day line of credit. So this is a Line of Credit of $100,000 that the Factor is extending to you as a Trucking Company and is specifically for processing the Carrier's Loads to get the Trucking Company Deposits ASAP when they deliver so they have that cash flow immediately. The UCC Lien is to protect the Freight Factors line of credit with the Carrier so a UCC Lien is used to make sure no other Factoring Companies can process the Carrier's loads to ensure your Factor that's paying you the advances on your Rate Con's is going to be paid back on the loads & payments that were advancing to the Carrier. Factoring allows the Carrier to get paid on Load's right away and the Freight Factor waits for 30 or 60 days to get paid by Brokers. So the UCC protects your Freight Factor to make sure the Brokers will pay them in 30 or 60 days and not some other Factor so the Factor can get their money back.