Everything About The Freight Factoring
Many are the times when the freight companies find themselves with huge pending bills due to the unpaid money by their customers. The freight factoring companies are patient with the customers until they come and off their bills. There are other expenses that the freight companies have to settle like paying the wages, fuel and maintenance cost. There are some of the expenses that cannot wait for long without being attended to like the fuel cost. Those urgent expenses are the reason why the company must have a ready capital. Some of the trucking and shipping organizations have interrupted cash flows as they wait for customers to pay bills for their services.
The issues of poor cash flows leads to depending on the freight factor. Factoring is a short-term loan that has the invoice as a collateral. The transporting or the truck company delivers good to their customers then take the invoice to the freight company for payment. The freight company then pays trucking or the shipping company in installments. They only pay the shipping company the full invoice after the client has settled the bill.
Freight companies benefit from the deal by taking some small fee for their services. Their prices are not the same for all clients but depends on the worth of the credit, the time of payment and the money to be factored. There are various factors in your business that should determine if your business is qualified to get help from the freight factoring company. You must consider the business cash flow, amount of money to be paid, the terms of payment and the loyalty of your customers. When you put everything into consideration then you can decide whether you need the freight companies to help you.
When you deliver any products, ensure your services are complete and are accepted by your customer. A company is eligible for the factoring if they are insured and have a motor carrier. The factoring company must ensure that your clients have great commercial credit to affirm that they will settle the bills in a specified period after receiving the invoice. Freight factoring companies do not work with companies that have legal issues like the tax problems. Check their range before you think of working with any factoring company.
It is crucial to compare their application fees, their monthly minimums and their advance rate with other similar companies Inquire how they deal with that bill that is not paid. Your research will prove to you that some of the companies accept the full responsibility of the unpaid bills. Others require their clients to pay them is the invoice is unpaid within the specified time while some will ask you to replace the unpaid invoices of the non-paying customers with the ones from the paying customers.