What is the Importance of Freight Factoring in the Industry?
A freight invoice factoring is a capital solution for the trucking companies to receive immediate cash from unpaid invoices. Trucking companies of all sizes can consider this popular funding method to solve financial shortcomings. A freight bill factoring company takes the copy of the freight bill from the truck company and accepts the paperwork via FAX or email. In the next stage, they verify the invoices and connect with the customers to collect the payment. Freight factoring is a go-to solution for many trucking companies who require immediate cash flow without waiting for the customer’s payment. A factoring company can pay its customer upfront and pin turn, after handling all the billing and collection.
Types of freight factoring
There are mainly two types of factoring services. Here are the differences between the two:
- Non-recourse factoring: When a trucking company signs a non-recurring factoring contract, it gets protection in case the clients haven’t paid the factoring company. In case the customers fail to clear the payment, the trucking company will not be responsible. In that case, the fees will be higher than non-recourse factoring.
- Recourse factoring: In this type of factoring method, the trucking company will be fully reliable for the non-payment of their clients. The fees of this factoring method are generally lower than the previous one, as there is a risk factor.
Benefits of freight factoring
- Easy to receive the finance: A freight bill factoring is appealing and has multiple business advantages. It is cheaper than traditional bank loans or personal loans. For those who don’t have credit cards, invoice factoring can be a viable solution for them.
- Speeds up cash flow: There is no secret that the freight factoring method allows the brokers to offer advances to the trucking companies. The company can also receive complimentary offerings, with negotiated discounts. There is no need to wait for the customer payment, and the invoice will be cleared by a particular date.
- Grow the business: It is quite difficult to grow a business when the cash flow is tight. But with the help of freight invoice factoring, one can meet the growing demand and get the payment on time. It can help in growing the business and hiring more drivers when required. A proper one-time payment can take away the extra load from a business owner. So, keep in mind all the important factors while choosing invoice factoring.
Most freight factoring service providers request their clients to complete an application for some basic information. However, the paperwork for freight bill factoring is a straightforward process. While operating a business, this unique financial method can provide an immediate cash flow. There are too many factoring companies available in the industry. Choose a factoring company after a detailed background check online. Make sure they are licensed. So, it’s time to take care of a business in the right way, by reducing financial risks.