Freight Factoring Companies – How Do They Work

Freight Factoring Companies – How Do They Work

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An invoice factoring company is very similar to a freight factoring company; the only difference is the freight factoring is used specifically by transportation companies which include brokerages and freight companies.

In the freight industry, these companies have loyal shippers and clients, but sometimes we cannot avoid the fact that some clients pay their invoices weeks and even months after the due date which can cause serious cash flow problems and can affect the growth of your trucking business.

The Solution to Cash Flow Problems

Most trucking companies experience cash flow problems most of the time due to one reason, they don’t get the money they need in time. Clients and collecting payments can be a real headache because aside from the fact that you have to devise a way to get the money you need, you are also faced with your own company’s needs and expenses that also have to be met as soon as possible.

1. Freight factoring companies provide the much needed financing and helps cash flow go back to normal.

You can choose to have a two installment transaction or a full advance transaction. Bigger companies would opt to choose the two installment transaction since they still have enough funds in their account to compensate for the shortage while smaller, fast growing companies use the full advance transaction.

The full advance transaction is where the freight factoring company buys the invoice in one single payment and charges with a flat service fee. On the other hand the two installment transaction has two steps involved: the advance and the rebate. Companies first get the advance which makes up 90% of the invoice value.

How to Qualify for Freight Bill Factoring?

Transportation companies can easily qualify for freight bill factoring and will only need the following: Proper insurance and a motor carrier authority.

Also, your clients should also have excellent commercial credit to guarantee that they will pay you after weeks or months from receiving the invoice. And lastly, your company should be free from any tax or legal problems.

Contact us today for Invoice Factoring Company

Mac Grath is an experienced Content writer and publisher for Freight Factoring Companies – How do they work?. Visit at http://www.factoringquotes.com/ to know more about Freight Factoring Companies and Factoring Accounts Receivable.

Article Source: https://EzineArticles.com/expert/Mac_Grath/1582138

 

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