Freight business is among the toughest business to run this is in light of the number of roles you get to play like being the owner and doing all the management work, keeping books of accounts in check, marketing and managing your staff, among other important roles. With all these shoes to fill and trying to juggle different tasks, keeping track of everything becomes virtually impossible — potentially allowing some important business functions to slip between the cracks.

That’s why you need to consider freight invoice factoring — a financial service that offers trucking companies with a reliable source of revenue and predictable cash flow for their business continuity. This allows you more time to focus on other aspects of your business.

In a fast-paced industry like trucking, the ability to maintain streamlined cash flow without having to commit to a long term loan is critical to your operations. But before you even start choosing freight factoring services, it’s important to first understand how invoice factoring works and determine whether it’s the route you want for your business.

Freight Invoice Factoring: How it works!

Freight factoring also referred to as trucking or transportation factoring is a form of advanced business capital for managing finances and credit. Let’s look at how freight invoice factoring works.

  • Factoring application First, you need to submit your factoring request for review. Once approved, you’ll receive a factoring contract that defines the specific element of your agreement such duration and fees.
  • Credit assessment The factoring company will go ahead to assess the creditworthiness of your customers and determine which ones to factor.
  • Submit the invoices to be factored Once your invoices are received the company computes a percentage of it and give you an advance — while working with your client toward recovering the amount owed.
  • Factoring Representative will make follow up calls to your customers, make collection oof outstanding invoices.
  • Factoring fee deduction is made once the pending invoices are paid. The reserves are sent back to you after the factoring company remits their charge.

Essentially, the factoring process is simple and straightforward as it should be to ensure you have access to quick cash at the shortest time possible, to pay logistic expenses such as fuel and repairs. Top factoring companies for freight brokers are also known to offer additional back-office services. In addition to the cash advance, other important invoice factoring services some of these companies offer include:

  • Credit checks
  • Billing and collection arrangements
  • Online reporting and data storage
  • Fuel advances and discounts

In choosing the best freight invoice factoring, you need to consider the reputation as well as the capacity to handle large invoices. How do you know if a freight factoring is right for your business?
The only way to determine if you need this service is by having a sit down with your company and analyze your options. They’ll help you decide but most importantly you need to keep the following questions at the back of your head so you can make an informed decision.

  • Do you have challenge collecting receiving payment from your customers?
  • Limited cash-flow is a problem to business, is this negatively impacting your business?
  • Delayed payment of invoices by customers affect your ability to pay suppliers on time?
  • How creditworthy are your customers, and do you have any problem with them on that?
  • Do you have customers who’ll pay in advance before loading
  • Are you wasting time as a resource following up and making collection calls?

If your answers to these questions are ‘yes’ then perhaps it’s high time you start to consider freight invoice factoring on some or all of your incoming invoices. This is taking advantage of back-office services, allowing quality time to improve other aspects of your business.

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