When you send out an invoice to a client, you would ideally receive the payment for that invoice shortly after that. Unfortunately, this isn’t always the case and freight companies often get the short end of the stick compared to other industries.
Overdue payments can eat your business alive and put your cash flow at risk, but having a diligent freight factoring company on your side can give you the peace of mind to keep moving forward. No more having to put your business on hold due to insufficient funds — freight factoring services will be your knight in shining armor.
Let’s take a look at the many benefits your trucking company will receive when using quality factoring services.
Are Payment Waiting Times An Issue?
As we mentioned previously, overdue payments can eat your business alive. While your clients may take their time in getting your invoices paid, your own business expenses can’t be postponed. If you want to keep your business running on a daily basis, you need this cash flow to survive.
Freight factoring services will solve this issue in an extremely practical way. They will take that invoice off your hands and give you an advance — typically around 75-90% of the invoice — until the client pays it. To sweeten the deal, most factoring companies will ensure you receive your money within 1-3 days!
No More Wasting Valuable Time
You might not think of it this way, but an overdue invoice only means you’ll be spending more time and effort on this client than they’re paying you for. It’s more than them not paying you; it’s you and your employees having to constantly follow up with them in hopes of receiving that payment sooner rather than later.
With freight factoring services, you won’t have the responsibility of communicating with the client — they’ll do that for you. This means you’ll not only get an advance towards that invoice, but you’ll be free of all the frustrating work that comes with it.
Non-Recourse Transactions
A freight factoring company that offers non-recourse transactions can give you an extra level of comfort when handing them any overdue invoices. Typically, the factoring company will send the invoice back to you and request a refund of the advance if the client is unresponsive after a predetermined timeframe. In a non-recourse transaction, the invoice is 100% the factoring company’s problem.
While this will mean you might forfeit whatever is left after the advance is accounted for, especially if that invoice is never paid. You will, however, get something out of the deal — and that’s better than nothing!
Additional Services
Lastly, many factoring companies will offer additional services that will provide even more value to your business. One of the major add-ons you should look for and give consideration to are fuel advances and fuel cards. This will give your business a safety net should you ever need fuel and not have the cash to purchase it.
If you’d like to learn more about how freight factoring services can benefit your trucking company, contact us today — we would love to speak with you!
References
“Small Business Factoring: Advantages and Disadvantages.” NFIB, 10 May 2010, www.nfib.com/content/resources/money/the-advantages-and-disadvantages-of-factoring-51593/.