Simple & Reliable
Simple & Reliable
Freight Factoring, also known as trucking factoring, it is the type of factoring that helps the transport companies to convert their unpaid amount receivables into immediate capital. Nowadays, it is becoming beneficial and familiar for a trucking company to take the help of Factoring Company for filling the need for instant cash flow for various expenses.
A trucking company is considered to be the backbone of a country’s economy. The company has many expenses that are needed to be fulfilled regularly. If these expenses are not cover-up at the given time, then they can create problems inflow of work. The expenses include fuel, weekly, or daily repairing of the vehicle. Continuous cash flow keeps the business in the run.
Running a successful Freight company is not an easy task. You have many employees that lookout for different works together at different time. They work on time to time payroll, and if it is not paid, then it affects the work. It is a place where Freight Factoring comes into action. It is a financial streamline to handle all aspects of your business.
Without Freight, the goods cannot reach to the place where they need to go. Continuous cash flow can be a major concern of the freight company. Freight companies frequently face the problem of long waiting payment issues. Freight factoring is the solution for growing your freight business without facing the problem of the regular capital flow.
Get Pro Tips For Regarding Your Invoices Now! Contact Us.
What Is Freight Factoring?
For finding a solution for cash flow through factoring, we need to understand what is freight factoring. Freight factoring is a way of selling accounts receivable to a factoring company at a discounted price. In return for which the company pays for it in installments. In the process, the company sells its unpaid invoices to a freight factoring company and receives up to 70 to 80 percent in return.
The rest of the amount is paid after the undertaking factoring company receives the total amount from the clients. The factoring company also subtracts its fees from it automatically. The approval is based on if the freight company has trust and creditworthy customers. The freight factoring is a straightforward and easy process; you don’t have to wait for longer and longer time to get the payment.
The amount is paid within 1 or 2 working days after the successful submission of the required things. Freight factoring is helpful to both small and mid-sized business operators. These business needs to paid quickly to their employees, and they also get regular and larger work for small-time intervals — these works required to be completed immediately with massive man force.
The required equipment and payrolls can fulfill all the requirements of the working people in these immediate projects. The help of the Freight factoring can achieve it. The company qualifies for the factoring by sharing the information on how the amount they need for the unpaid invoices. The Factoring Company shares the data of what is their budget for the outstanding invoices.
How Does Freight Factoring Work?
A freight factoring company enables you to handle the credit of your company. You should be aware of how does the process of factoring works? We have prepared detailed information for you on how the work of Freight Factoring goes on:
Complete your work as usual
With the help of factoring, you can ensure that your work is going on as usual without any problem and delay. You don’t have to face any disturb in work and can take larger and smaller projects without any worries.
The present copy of your amount receivables to the Freight factoring company
Firstly you need to submit a copy of your freight bills; also, you may be asked to include statements of import or export of the goods with the sheet of rate. You can submit these documentations directly through scans, email, or fax. When it is successfully delivered to the factoring company, the factor will confirm and test it to check whether the work is productively completed.
The hiring company will receive an enormous quantity of advanced payment
After the factor confirms and tests the freight receivables, then your company will get the promised advanced amount, which is around 70 to 80 % of the total price of unpaid invoices. You may get the amount on the same day or within 1 to 2 working days based on the process of the factoring company.
You can avail the amount through cash, check, bank transfer, or according to the factoring company or your feasibility.
Now it is the job of Freight Company to collect the amount receivables from the clients.
The factoring undertaking company takes the job of collections of payment from the customers. It starts after you get paid for the invoices. Now the freight factoring company has to collect and pay your rest amount. Also, you can focus on the growth of your business.
Types of Freight Factoring
Sometimes clients fail to pay for their unpaid invoices. This can affect the process of working of the Freight companies also can impact the factoring process at a significant scale. This is so because the company factors the amount based on the customer’s regular credit to the company. If it has many irregularities shown, then it can lower down the amount of the receivables.
Sometime the freight company may ask you to buy back your incomplete invoices at a higher rate and also pay you low factoring fees. They may ask you to pay a higher factoring fee. Growing a freight company is not very easy, and when we are talking about to battle against big leading freighting firms for loads. We work across the nation, and within our network, you will find the best option for factoring for your invoices.
The team of experts makes these options available at negotiable rates. With small fees and a large amount for your invoices factoring services provided by us, you can go for high growth. We have provided you some of the lists of common types of the freight factoring services:
Non – Recourse Factoring
When your client is the slow payer of the invoices, then factoring is the best option you can go for. Non- Recourse factoring characterized a single fee installment for the invoices you provide. The company makes sure that you will get paid for the invoices even if your client fails to pay for the incomplete invoices.
The Factoring Company bears the loss of unpaid invoices. Non- recourse is best for the mid or small-sized companies that have a fear of not getting payment from the customers. This will save them from more significant financial loss. You can successfully keep your business intact if your client fails for the invoices.
The non- recourse factoring does not have any hidden cost in it, but some companies impose it. So you should carefully read all the terms and conditions of the company before signing any deal with them. We offer you the lowest rate among other factoring companies. We work across the nation, so we set the prices accordingly.
You will have extra capital in your hand then adding debt into it. You will now not have to take the tension of limiting the speed of the capital. Control the amount of factoring cost by factoring the quantity and type of invoices you want to factor. There is no limit of factoring invoices so you can choose the invoices that genuinely need to be factored.
Recourse Factoring is the process of selling of account receivables by the hiring company to the factoring company. The hiring company makes the promise with the factoring company that they will buy back the invoices that remain uncollected or unsuccessful in being paid by the customers.
The freight factoring company does not bear the loss for any unpaid account receivables. Most of the factoring companies work on Recourse factoring to avoid the risk of taking the loss of the unsuccessful or unpaid invoices. The factoring company may ask you to pay back at a higher price for the invoices.
They also may ask the borrowing company to pay more prices for the factoring fees. Recourse factoring is more advantageous for the lending company. The lender has a permit to send back the unpaid invoices to the borrower, and the borrower has no choice other than to accept it.
Then the amount of risk for the lending company is lesser than the borrower as they are on the liable for buying back the uncollected invoices. While if we see the benefit of the borrower, the recourse factoring is more affordable than any other factoring options. But the borrowing company should understand the risk of failure of unsuccessful payments.
Flat Fee Non-Recourse Factoring
The flat fee will always ensure that your company does not have to pay an extra charge for a longer delay in payments from the customers. You will not have to pay any amount for how long the unpaid bill is opened. This will ensure that you can cooperate with the fees of the factoring without thinking about the budget.
Non-Recourse Factoring comes with the lowest rates of the factoring in comparison to other types of factoring companies. The non-recourse also charges the trucking company a flat fee for the cargo. One of the advantages of having a non-recourse flat fee is that if the amount is not paid or fails to pay on time, then the factoring company fills for it.
The freight companies will still get paid even if their invoices are not paid successfully. There are very few companies that offer flat-fee non-recourse factoring to the hiring company. If you have a small or middle-sized company, then it is the best option for you to choose with. No additional debts added to the balance sheet.
You have to carefully choose the factoring company and read all the terms and conditions closely. You should be clear with all the agreements and promises that you can company makes to each other to remove all inconvenience from the future. You should do necessary insights into the type of factoring in the case; you don’t know which to choose.
Flat Fee Recourse Factoring
If your company is looking for factoring of the invoices should have a solid background of money in the account and able to recover for the damage created by the unpaid invoices. Flat fee recourse factoring for freight factoring services is a type of invoice exchange in which if the client of the hiring company doesn’t pay for the invoice. Then the company is responsible for taking it back from the factoring company.
Following are some ways the flat fee recourse factoring works:
- The factoring company signs a terms and conditions deal with you for the unpaid invoices. These terms and conditions are based on rules set and agreement by both lender and borrower.
- The factoring company asks you to deposit the freight bills or trucking amount receivables to the factoring place. The factor verifies the papers and pays you up the advance in minimum time up to 24 hours after the papers are deposited while cutting the flat fee.
- The factoring company now starts collecting the amount of the due invoices from the clients on the promised date.
- The client will pay the amount of the invoices directly to the factoring company.
- The factoring company shows the total collected balance to the hiring company.
- If the client is unsuccessful to pay for the invoices in the given time, then the hiring company has to bear for it and pay the amount with fees.
Why Should You Use A Freight Factoring Company?
Factoring for your freight invoice is an easy-going way of lending solutions for your business. As the size of the business and credit history of the customer won’t affect the choice of a factor of your company. Freight factoring services help the hiring company to pay for the payroll of the employees or complete other expenses of the company.
We have prepared some points on why we should choose a freight factoring company for financing the incomplete invoices:
When you work with an experienced company in the freight business, you will get capital at the place where you needed it most. The experienced company knows very well that where you will find difficulty in arranging the cash. They will share their experience with the Freight company, which will help you to reduce future risk. So before going to sign a deal check the agreement and the experience of the company.
The hiring company can see a constant growth in their company as soon as they select the service from the freight factoring company. The flexibility and enormous capacity of the factoring will help your company to be backed up. Instead of getting approval for a loan from the bank, you can choose the financing option to get the amount within some days.
Some freight factoring companies proved back-office solutions to the borrowing company. These are the staff members that know the work of the company and are very experienced in the field of freight business. This team of specialists will increase the growth of the company at a greater pace.
The factoring company sometimes provides additional facilities with the finance of the invoices. If you choose a good factoring company, then you can get premium features of the extra service. You will get notified with the customers that are good at providing the credit. You can choose the best customers for future business.
A factoring company saves the critical resource and time of the borrowing company. Your company will have now not wait for months to get complete payments. When you finance the invoices, you get instant cash within days. You can quickly sum up the payroll and buy the necessary equipment for your freight company.
Get Pro Tips For Regarding Your Invoices Now! Contact Us.
What Is A Factoring Company For Trucking?
Truck factoring is the ability to convert your unpaid amount receivables into immediate cash. The decision of factoring for trucking invoices is based on the ability of the customer to complete their amount on time as they are responsible for completing the amount of the bill. It is an excellent option for the owners of the trucking agencies to get startup for their weaker financial background.
Larger trucking companies also can avail of this feature for maintaining positive cash flow. Truck factoring is the fastest means of getting instant cash for your business. Once the factor approves it, then within 24 hours or 1 to 2 working days, the advanced cash is paid to the hiring company. You can deposit the amount in your companies account.
The factoring company offers meager fees for the services they give to the trucking company. Fees structure is made according to the market, and the factor will reduce the costs from the remaining amount before sending it to you. The advance payment is decided by the factoring company, which is based on some necessary conditions made by the company.
Sometimes even most successful transportation companies struggle with cash problems. These companies take the help of factoring companies to fulfill the various expenses of the company. The trucking company is the most growing agency and requires covering the gap of cash for multiple expenses problems.
Freight Factoring Example
Freight business is the industry of goods transported in bulk by truck, train, ship, or aircraft. Whether the cargo is sensitive or over-sized, and it is to be sent to domestic or international destinations. All the work is done while keeping the safety of all things intact without delay. The delay means loss, and sometimes there may be a greater loss.
The factoring company ensures that you do not face any problem. All your work is essential, so they provide you with a way through which you have to not worry about the immediate cash need. Trucking factoring is the way through which you can come out of the entire problem. A quantity of amount is paid to your account by the trucking factoring company.
Here We Take An Example Of How This Works.
In the example, the customer of the factoring company has to have invoice finance for about 5 thousand dollars. The customer has a good credit score and can pay the amount in 30 days time period. The customer can get the following conditions by the trucking factoring company
- Pay: 70 to 80 %
- Fee: about 4 to 5 %
- Amount: it is paid after cutting the above price
Benefits Of Freight Factoring
It is essential to choose a freight factoring company very carefully. This is a wrong understanding of many companies to think that all the factoring companies are the same. They should understand which company deals in which factoring.
We have developed a list of advantages that you can have through freighting bills
Most of the trucking factoring company provides a great amount of advance payment to the hiring company. The advance can go up to 70 to 80 % of the total cost of the invoices. Sometimes it can go to 90%; with it, the company may also provide additional advance fuel payments.
The invoices can be financed in about 24 hours or some conditions days. All the time depends on the time of completion of the application. So considering the time, it can be said that freight factoring can be used for immediate cash flow.
The financing of the invoices will improve the cash flow of your company. Now you are eligible to take a larger project and focus on increasing the company without any worries. This is so because you are getting equal and quick pay from the factoring company for your pending invoices.
The factoring company will provide you the list of the customers that pay their amount on time and also those that don’t. You can select from the best customers with whom you are going to do future business
The biggest and most useful advantage of freight bill factoring is you have the choice of choosing the desired invoice that you need to finance. While other loans have a fixed amount, the freight factoring will give you the chance to grow with it. If you choose short term factoring, then it may not be of much use, but choosing a long term factoring can provide you other convenience.