How does the freight factoring company work?

An invoice factoring companies work in a similar manner as the freight factoring company. The only difference between the freight factoring company is that it is designed specifically for the transportation company which includes freight and brokerage company.

The freight industry has loyal clients and shippers but one cannot ignore the fact that the clients take weeks or even some months after the due date to make the payment. This results in serious problems with the cash flows which affect the growth of the trucking business. Most of the trucking business suffers due to cash crunch problems. They do not have the money which they need at the right time. Clients and the payment collecting methods becomes a headache though one devise ways to collect the money which one needs. Many companies do not have funds to compensate for the daily expenses. Factoring company helps with the financing mechanism.

Freight Bill Factoring Process

Freight bill factoring for the transportation company is structured in two different ways. One can select a two-installment transaction or full advance transaction. Generally, the bigger company opt to select the two installment transactions since they do not give enough funds in their accounts for compensating the shortage while the small companies demand the full advance transaction due to their fast-growing nature.

The full advance transaction in the freight factor companies is the one when the invoice is brought in one single payment and a flat service fee or charges is imposed. While the two-installment transaction method includes two-step: advance and rebate. Companies extend 90% of the invoice amount as advances and the balance 10% is cleared when the clients pay off the dues.

Whether you have a large-sized business entity or a small one, seeking the assistance of the factors helps in easily meeting the cash flows demand. There are some well-known companies that offer factoring services to a wide variety of businesses such as distributors, business services, manufacturing companies, freight companies, medical products industry, technology companies, small hospitals, trucking companies, and temporary staffing agencies. An invoice factoring company customizes the right kind of financial product required which is suitable to the business needs.  

      
Read for more info: https://www.factoringfast.com/