Almost 12 million rail cars, trucks, vessels, and locomotives move goods over the transportation network. The trucking industry is one of the markets that has attracted a significant number of investors. The urge for people to move goods throughout the country and globally has seen an increase in freight and logistics companies. However, as some trucking companies make a significant amount of profits, others face liquidation and bankruptcy. Lack of cash flow is one of the main reasons why several trucking and logistics companies have failed to remain competitive. But the inception of freight factoring services has significantly helped in sorting out such issues. As a truck owner, you intend to receive your payment early enough to keep your trucking business afloat. Unfortunately, some trucking companies never get to receive their payments in due time. They even have to put up with bad debts. Fortunately, this problem can be sorted out through invoice factoring. This is where a company sells its unpaid invoices to an invoice funding company to receive payment in return. According to A Wall Street Journal, the factor advances most of the invoice amount about 70% to 90% after checking out the billed customer’s creditworthiness. Once the bill is paid, the invoice factoring company remits the balance minus a factoring(transaction)fee. Nevertheless, to enjoy reliable freight factoring services, there are some tips you ought to put into consideration when choosing a freight bill factoring company. They include:
Terms and Conditions
This is very important. Ensure you thoroughly read through the terms and conditions being offered by the freight factoring company. Get to know what the contract will entail and the legal proceedings that ought to be undertaken in case of a breach. Get also to understand the set factoring fees and the payable percentage that the invoice factoring company offers. Doing so will help you cut a reasonable deal. You will get a considerable amount of advance business capital to ensure your freight operations keep on running.
Intensive Research
The invoice factoring market is well-endorsed with firms that offer freight factoring services. However, not all those business invoice factoring services will live up to the customers’ demands. Some are out to exploit potential clients. In that connection, you have no otherwise but to do some good homework. Conduct intensive research on the freight factoring companies at your disposal. Read some of their past customers’ reviews to have a feel of the kind of freight factoring services they offer. Consult from experts in load factoring companies to get insight on which is the most reliable firm to work with.
Level Of Experience
Invoice factoring is an account receivable financing option that converts unpaid invoices under 90 days into instant cash for the business. Therefore, freight factoring companies usually help freight companies bridge invoice gaps using upfront payments of about 90% of the original invoice. Not every freight factoring company has the financial muscle to advance such a percentage of payment. Lack of experience subjects them to competition anxiety whereby they take up the responsibility of providing freight factoring services, yet they have insufficient funds. As a truck owner, you are bound to stall your operations if you work with such a factoring company. You must get to know more about the firm you want to seek factoring services from. Make sure you learn how long they have been providing these services. Learn from their past clients concerning the quality of their services too.
Legal Compliance
The invoice factoring company you choose to work with must be authorized to provide advance business capital services. This ensures you are dealing with a legitimate company and not a group of fraudsters. In that regard, care to find out if the freight factoring company has been licensed to operate or not. In doing so, you avoid falling prey to a firm that wants to exploit you.
Conclusion
The search for a freight factoring company can be tedious and frustrating. With the high number of invoice factoring companies, it is very easy to get low-quality freight factoring services. To stay clear from such a possibility, ensure you do enough research on invoice factoring companies, compare factoring fees, check their legality and level of experience.
