Need cash flow somehow but don’t know how to get it? Check out these 5 great things freight factoring can provide you!
Recently freight factoring services have proven to be of great importance and relevance to many organizations such as businesses and big companies.
Logistical problems are the hindrance of every transportation payment process such as movement however, they particularly affect those that are required to move goods using services associated with freight.When using such like distribution and channel, a lot of troubles that might seem to be complex are dealt away with easily.
It is very simple for one to start a trucking business but it is a different job altogether to maintain and keep it running. Most trucking companies often face cash flow challenges which are often created by those clients who pay their invoices within a range of between 20 to 60 days or even more. However, expenses originate on a daily basis in the form of driver’s wages, fuel bills, truck repairs and what not. One could solve this problem by requesting the customer to pay as fast as possible. Faster payments from the customer can also be enhanced by offering discounts for quick or early payments, but the customer can still decide when to make the payment which makes this strategy useless.
To solve the cash flow problems the traditional method can be applied such as approaching a bank for a loan. If the company is just in its early stages then the bank might expect a greater risk and demand for a larger security against the loan. Another challenge would be that the amount of the loan would be fixed and would have to be paid back within a specified amount of time through monthly installments. Hence applying for funds from banks and other organizations might leave you in severe conditions eliminating flexibility in case you require more money which would be possible only after the complete payment of the previous loan.
Professional freight factoring services have become very well known and a common practice in the sector of trucks today.It allows the trucking organization to pay for its expenses such as their repairs, fuel, and its drivers on a timely basis without having to be distressed about the late payments from their customers.
In freight factoring, credit invoices are bought from the trucking company who in turn pays the invoice amount within a number of days. A small factoring fee is charged by such factoring companies. The fee will depend on the credibility of the customers, the number of days which have been extended from the trucking organization to their client and the total volume of business at large. Freight bill factoring allows you to get paid almost immediately even if a credit invoice has been issued to the trucking company’s client. This ensures a regular cash flow for the trucking company allowing it to deal with its daily expenses without any delay.
Some of the advantages of freight factoring services include:
– It is cheap to qualify
– It makes it possible for the trucking organization to go ahead and take the recently made loads and shipments.
– The trucking organization no longer has fears about the collections.
– Easy and quick to set up.
– Ensures steady cash flows.
Freight factoring is a type of business that works mainly with trucking and freight moving companies. Using a factoring service for a company is an alternative way that a freight company can finance itself. Freight factoring does this through buying jobs from the customers and then helping freight companies find those jobs much more easily. This makes it so that freight companies will always have the money necessary to keep operating and growing.
Freight companies will not have to spend a lot of time bidding or searching for freight jobs anymore because they can just find one through a freight factoring company’s assistance. Freight factoring companies also make sure that truckers are paid for their services because the freight factoring company will be the one handling the receiving of payments from the clients.
The way freight factoring works is pretty standard. Just like you would in a normal job, you would still charge your clients some money to finish the jobs. The freight factoring company that you have hired will then be the ones in charge of collecting payments from your customers. These freight factoring companies will also give you an upfront payment of the money if you have already completed the job.
This saves you the trouble of having to collect payment yourself, and it also reduces the risk of not getting paid by flaky customers because it is the freight factoring company that will be the one to handle receiving the money from your clients. As long as you finish the job properly, you should have not troubles with a freight factoring company. In fact, it can be better for your company because a freight factoring company will make it easier for you to handle the various processes of a job. This is because you can just concentrate on moving the freight, without having to worry about the payment.
Different freight factoring companies will charge different amounts of money. In general, most freight factoring companies will charge you around a percentage of the total job’s payment. For the initial payment of the bill, most freight factoring companies also give you around 90% of the total cost of the job. You will receive the remaining amount, in this case, example, the remaining 10% of the job’s payment, after your client has settled the bill with the freight factoring company.
Of course, you would have to finish the job. Once it is finished, however, you can expect to receive the full amount, you are also given essentially in advance a percentage of the amount you would have been paid even before you finish the job itself.
Freight factoring is an especially essential service for small owner-owned freight companies. This is because the operators of these small companies do not have to worry about having to deal with accounts receivable or collections. The freight factoring company will handle funding accounts receivable, and bill collection. This will leave the small business operators more free time, while still getting paid. It is also a cost-effective and wise financial decision if freight factoring companies are used for your business.
This is because it is much cheaper if you hire the services of a freight factoring company, rather than maintaining the costs of running a collections department yourself. And if you plan on fully running the collections service yourself, you could save a lot more time by outsourcing that kind of job to a freight factoring company.
A freight factoring business might be just what you need to kickstart the running of your freighting company!