Freight Invoice Factoring How Does it Work?
You always need to make sure that you can maintain your truck when you’re on the road. But, to some, cash flow can be a challenge for most trucking or other small businesses. The good thing is that there is already a small business invoice factoring to address this issue.
But what is freight invoice factoring? How do these business factoring services help businesses? That’s what you are going to know in this blog. So without further ado, let’s get started.
Freight Factoring Services to Companies
There are about 28 million small businesses in the US today. The freight invoice factoring can also be defined as transportation factoring. It is a cash flow solution businesses have in selling their invoices or accounts receivable. This is to receive immediate payment for delivered loads at a discount rate.
Small business factoring also allows most trucking companies to receive cash right away from invoices that are not yet paid. With cash on hand, trucking factoring companies can pay for their workers, materials, and overhead costs.
Understanding the Process of Freight Invoice Factoring
The first process is easy, as most trucking companies are already doing it by delivering their load as they normally would. Next, they need to submit a copy of their freight bill, referred to as the bill of lading, to the invoice funding companies. If the company offers invoice factoring services, they would just accept the paperwork through FAX or email.
Companies also offer the ability to upload the paperwork through a web portal. When they receive it, the freight factoring companies verify their invoices and work with their customers in collecting payments.
They would receive the money that same day once the factoring company had already verified that the load was already delivered and checked to see if fuel advances were taken.
And if you’re on the recourse program, you will receive the agreed advance rate within 24 hours. This is from the day that the Bill of Lading was submitted. Finally, once the client paid the invoice, the reserve would be released, less the factoring fee.
Why Consider Freight Factoring Companies?
Every owner of businesses should know that they will experience fluctuations in their business. Therefore, you must prepare the appropriate financing options. So, why should you consider freight invoice factoring? Here’s what you need to know.
1. First is that it could provide you cash flow immediately. You indeed want immediate processing of payments, especially in times of emergency. Starting with an invoice factoring company is a very big help.
2. Businesses could also get access to funding even if they have no credit. When a business is just operating, it probably hasn’t established a line of credit. Invoice factoring provides cash flow to businesses, even if they only have limited or no credit histories.
3. It also saves time and money on collections. Freight invoice factoring can also help alleviate the stress because of collections and invoicing. The factoring company would handle the responsibilities like collections and the accounts receivable. And with that, you can always have peace of mind and enough time to focus on your tasks.
4. Lastly, it also provides flexible contract terms as there are no long-term contracts. You can just submit unpaid invoices whenever you like, and once approved, you may decide how often you are going to invoice factoring services and use them as funds for your business.