 Freight bill factoring can be used in the following all too common scenario. Your small trucking company was started with five units and a lot of industry experience. So, things started out well, with revenues per mile on an upward trend, and an addition of two units the first year. Besides, the expense pressure of higher fuel expenses, driver settlements, permits, insurance, and repairs have begun taking its toll.
Tightening cash flow even further is the credit you are protracting to your customers. You can see many accounts over 30 days if you will take a look at your accounts receivable aging schedule. You are not getting paid for delivering your end of the deal in a timely manner. The result is obvious: you are providing the use of your money to your customer for free. But payroll fuel and other costs can’t be put off for thirty or more days.
Then you should decide what will be better for you to do. You have to be careful because you may lose customers right and left. Luckily, there is a service which is called freight bill factoring that can provide a safety net for your company and allows you to change freight bills into instant cash flow within 24 hours.
However, invoice factoring is the buying of a company's accounts receivable at a discount.
This process is simple:
1. Fill out a simple application and include a receivables aging report.
2. Then factoring company will review the application and determine credit worthiness of the client's customers.
3. Letter of intent is given to the client, outlining the proposed advance rate and fee structure too.
4. Upon acceptance of the terms, a formal contract is executed.
5. Initial funding can occur within 3-5 days.
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