Who doesn’t wish to expand their company quickly and efficiently? A practical approach you can take is to get freight factoring services.
If you have a freight company, then you must be aware of how tedious it can be to maintain a steady cash flow to keep your business going. Keeping track of bills can become complicated, especially when most of your clients pay net 30 and some even up to 90.
Growing and expanding your business will have you putting out money regularly just to keep up with the daily expenses. However, issues may arise if you don’t have a consistent cash flow to support your fledgling business. Freight factoring services can help with this.
If you’re still hesitant about using invoice funding, read on to see the reasons why you need to do so.
Ensures a Consistent Cash Flow
Working with firms that provide freight factoring services can help you get a steady cash flow. Invoice factoring financing is a financial strategy involving accounts receivable that converts outstanding invoices that are due within 90 days into instant cash for your small business. To put it more simply, you’re transferring your bills to a factoring business in exchange for speedier payment.
What to expect with freight factoring:
- Depending on the company’s policies, you may get up to 90% of the value of your approved invoice.
- You can begin using the funds to expand your company.
- After your client pays them, you will receive the remaining 10% of the total value after subtracting the invoicing company’s fees.
No Collateral Involved
The best invoice factoring services offered by factoring companies can assist small businesses in bridging the gaps between invoice payments with upfront and immediate cash flow that can be up to 90% of the original invoice. There are approximately around 28 million small businesses in the U.S., and load factoring companies can be truly helpful.
You will have to wait until the pay cycle is over to receive the total amount of the invoice (less the fees). However, it can offer great assistance to your business as you can begin utilizing 90% of the invoice value as soon as your request has been accepted and approved.
Unlike typical business loans, you won’t have to worry about debt since you sold your accounts receivables to the factoring company. Plus, you won’t be needing any collateral otherwise required by other financial companies.
Both Application and Approval are Simple
Freight factoring services, unlike other forms of financing, are simple to start. Because there are fewer factors involved, the overall processing time is faster.
One thing to guarantee is that your clients have a good credit rating. This way, you will be approved quicker. Not only that, but your business should also have a good credit rating and a clean credit history, with no judgments nor liens.
If your business is relatively new and just starting out, you should try invoice factoring. You’ve made it halfway, thanks to your spotless record. Now you only need invoices from reputable clients.
Protects You From Delinquent Clients
Non-recourse factoring is offered by the best freight factoring businesses to eliminate the possibility of clients failing to pay on time. It removes the risks involved with clients who are always late on their payments. Even though all factoring providers offer recourse factoring, you should always choose the non-recourse option.
The following is the distinction between the two:
Recourse factoring involves cheaper charges, but you are responsible if your customers fail to pay. If the factoring company cannot collect the money from your delinquent clients, you will have to buy the associated invoices back.
On the other hand, non-recourse factoring eliminates the risks involved. There is no pressure on you even if your customers fail to pay. You are no longer obligated once the factoring firm has purchased your invoice. However, you’ll have to pay a much higher price to cover the risks that the factoring firm will assume in your place.
Boost Your Business with Freight Factoring
Don’t let sluggish cash flow caused by long payment cycles hold you back. By applying for transportation factoring services, you can join other small businesses that are not waiting for slow-paying customers to cover their invoices. Invoice factoring services can help your company get immediate cash flow to grow your business while reducing payment risks.