Wouldn’t you want your business to succeed and grow quickly? You can use a practical strategy that uses freight invoice factoring services.
If you own a transportation company, you know how difficult it can be to keep your income stream stable enough to keep your operation running. It can be easy to lose track of your expenditures when most of your customers pay a net 30 and sometimes even up to a net 90.
You’ll need to make investments consistently to maintain and develop your firm, in addition to paying day-to-day operational costs. However, problems could develop if your startup business doesn’t have a steady income stream. In these cases, companies that offer freight invoice factoring can be useful.
No Need for Collateral
In the United States, there are many small businesses today – about 28 million in total – that can find load transportation factoring companies to be quite beneficial. Finding the best invoice factoring services suitable for your needs is crucial as they can help you bridge the gap between invoice payments. The upfront payments you’ll receive can amount to up to 90% of the value of the original invoice.
You just have to wait for the factoring financing firm to approve and grant your request. Then, you can start using the approved amount – helping your company considerably.
No need to stress about being buried in debt since you used your accounts receivables in exchange for the factoring service. Additionally, you wouldn’t have to provide any collateral, which other banking institutions would typically request. It’s unlike traditional business loans, where you’ll need collateral when you apply for one.
More Steady Income
Gaining a consistent and reliable cash flow can be achieved by working with companies that offer freight invoice factoring services. This financial approach called invoice funding uses your accounts receivables to turn unpaid invoices that are due within 90 days into immediate cash that you can use to run your small business. It’s like converting your bills to quicker payments.
The following are things you can expect when you work with invoice funding companies:
- You can start using the money to grow your business.
- You can be eligible for up to 90% of the amount of your accepted invoice, depending on the factoring company’s policies.
- The remaining 10% of the entire value, less the invoicing company’s fees, will be paid to you once your client has paid them.
Easy Application and Approval Processes
Contrary to other sources of investment, freight invoice factoring services are easy to establish. The total time needed for processing is less due to the reduced number of elements involved.
You must ensure that your customers have solid credit scores. It will hasten the approval process for you. Additionally, your company should have a strong credit standing and a clear credit history free of judgments and liens.
You can use invoice factoring if your company is still quite new and just getting started. And if you have a flawless record, you are already halfway there. Now you just require invoices from trustworthy clients.
Protection From Unreliable Clients
The best transportation factoring companies provide non-recourse factoring to eradicate the potential of late payments from clients. It eliminates the dangers associated with customers who consistently make untimely and late payments. Although recourse factoring is an option offered by every factoring company, you should always go with the non-recourse option.
The differences between the two are as follows:
Recourse factoring has lower fees, but you are still liable if your clients don’t pay. You will need to purchase the related receivables back if the factoring company is unable to recover the funds from your past-due customers.
When you choose non-recourse factoring, it removes this risk, so you won’t be pressured even if your clients don’t pay the due invoices. Once the invoice company pays for the invoice, you are free of any obligation. But you will pay a significantly higher fee to cover them since the funding company will bear the risks on your behalf.
Gain Business Advantage with Freight Factoring
Don’t let the slow income stream brought on by prolonged payment cycles hinder you. With transportation factoring services, you won’t have to wait for sluggish clients to pay their invoices. Such services may assist your firm in obtaining quick money flow for expansion while lowering payment risks.