Most companies want to grow their business in the easiest and most efficient way possible. One sensible option you can take to expand your company is to utilize factoring company freight services.
Owners of transportation companies are probably already aware of how difficult it can be to keep the incoming cash flow as consistent as possible. But maintaining a steady flow of readily available cash is important to keep businesses running smoothly.
Apart from the day-to-day operational expenses, growing the business will also require you to have available cash on hand. And if you don’t have a steady flow of income, problems can affect your business. That’s why transportation factoring company freight services come in handy.
Still not convinced about the importance of invoice funding and freight factoring services? Keep reading to find out the reasons why you should.
The Application and Approval Processes Are Straightforward
Unlike other types of financing, freight invoice factoring are easy to get. Since few variables are considered, it reduces the overall processing time.
However, you must ensure your clients’ excellent credit if you want to get approved faster. In addition, your own company should also have a clean credit history and excellent credit rating – with no liens or judgments.
Even if your company is just getting started and entirely new in the industry, you should consider factoring company freight services. Having a spotless record will help considerably, but don’t forget to check if your clients are just as reputable.
No Collateral Necessary
Factoring companies provide invoice services that can assist small businesses considerably. By providing immediate cash up to 90% of the original invoice value up front, they help bridge the large gap between invoice payments. With so many small businesses – around 28 million – in the United States, these factoring services can be highly beneficial.
Once the factoring company accepts and approves your request, you can immediately start using 90% of the invoice value. You need to wait until the pay cycle is completed before receiving the rest of the invoice’s total amount. But it can help your business have funds for daily operational expenses.
Unlike traditional business lines of credit, you will not be saddled with debt because you are selling accounts receivable instead of putting up assets as collateral.
Maintain a Steady Cash Flow
With a Net 30 payment scheme or even longer, it can be really tough to keep track of all the bills.
Getting factoring company freight services can help you maintain a consistent cash flow. The approach used by invoice factoring involves using accounts receivable to turn pending invoices due within 90 days into quick cash you can use right away. To put it another way, you’re turning your bills over to an invoice factoring company in exchange for faster payment.
Here’s a brief summary and rundown of what you can expect with factoring services:
- It’s possible to receive up to 90% of the approved invoice value, but it still depends on the company’s terms and policies.
- You can start using the funds to grow your business right away.
- Obtain the remainder 10% of the total worth (less the invoicing company’s fees) after your clients pay.
Guards You Against Neglectful Customers
Freight factoring companies provide non-recourse factoring to decrease the likelihood of clients avoiding paying on time. It eliminates the risks associated with customers who are perpetually late with their payments. Despite the fact that all factoring companies offer recourse factoring, you should always go with the non-recourse option.
Recourse factoring has lower fees, but you are liable if your clients do not pay. If the finance company is unable to collect payment from your neglectful customers, you will be required to repurchase the corresponding invoices.
Non-recourse factoring eradicates the associated risks. Once the finance company has acquired your invoice, you no longer have any obligation – even if your clients fail to pay. You will, however, have to pay more to cover the risks the factoring company will take for you.
Enhance Your Business with Factoring
Don’t let stagnant cash flow and lengthy billing cycles drag your business down. By utilizing factoring services and advance business capital, you can follow the example of other small businesses. This way, you can provide your company with upfront cash flow to help it grow while minimizing financial risks.