Trucking factoring is often referred to as a blessing or curse which means success or failure for the trucking business. Finding the appropriate freight bill factoring company is not considered to be an easy task. It is necessary to find the right kind of factoring service provider which would suit the business need and help it to make successful.
What is factoring?
Invoice factoring is known as short-term lending by making use of the accounts receivable or open invoices as collateral security. In the trucking business, invoices are paid between 45 days to 60 days. A cash-intensive business mostly the trucking company does not have a sufficient amount of cash reserves to run the business uninterruptedly. Even waiting for 30 standard days is too long for a small-sized business. Trucking factoring services come as a beneficial solution that provides cash for all the invoices within a day or two. However, they might put a huge burden on companies by imposing fees which range around 1% to 8% which depends on the terms and conditions. These fees are deducted from the aggregate amount collected of the invoices and in extreme situations at higher rates which might be more than the profit of invoices.
When to factor the invoices of the company held and when one should not?
Accounts receivable factoring can help to fetch quick capital within a short period of time. It is necessary to make sure that the expense to factor the invoices are low than the benefits derived from the same. A trucking company generally runs at the lower margin of 10% and pays factoring fees which dig up the profit and do not even cover the unexpected expenses. Be careful of the various services offered as the fees vary accordingly. At the same time, the creditworthiness of customers, the total factoring amount too make a difference.
Therefore, it can be concluded that the trucking factoring company helps in the growth of every business when there is a lack of sufficient cash flow. However, make sure to engage with a reliable company to fetch the best benefit.
Factoring
Fast
Add-2000 Auburn Road,
Beachwood OH 44122
+1-888-897-5470
admin@factoringfast.com
