How,Use,Freight,Bill,Factoring business, insurance How to Use Freight Bill Factoring to Finance your Trucking C
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Managing the expenses of a growing transportation company involves a fair amount of juggling. There are fuel payments, driver payments and the constant need for repairs. Juggling becomes a need because most clients take 30 to 60 days to pay their freight bills, while expenses happen constantly. Although large carriers or brokerages may be equipped to handle costs while waiting to get paid, few small carriers can.One way to solve this problem is to ask customers for quick pays. Many times, that strategy will work. But you will always be at the mercy of your customer. Another alternative is to secure business financing - through a business loan or throughfreight bill factoring.Freight factoring works by giving you an advance against for freight bills and is ideal to handle slow paying clients. The advance payment comes from a factoring company rather than from your client. This eliminates having to wait for your customers to pay, and provides you with the needed funds to cover business expenses.For many transportation companies that are dealing with slow paying customers,freight bill factoring will solve this problem better than a business loan would. It targets the problem at its source since freight factoring is designed to help with slow paying customers. Freight factoring is flexibly and adapts itself to your monthly billings - growing and shrinking as necessary. More importantly, it's easy to obtain. The biggest requirement to qualify is to have good credit worthy commercial customers. So even a startup company, whose biggest asset is a strong roster of clients as a good chance of qualifying.A typical transaction would work as follows. The carrier sends the freight bills and other information to the factoring company, who then issues an advance of 90% (sometimes this can be higher). Once the invoice is actually paid by the customer, the factoring company rebates the remaining 10%, less its fee. Fees vary and are based on volume of your billings and the quality of your clients.Although not a cure all, factoring can be a great solution for companies that can't afford to wait 30 - 60 days to get paid by clients.
How,Use,Freight,Bill,Factoring