Nearly all independently-owned companies run into cash flow problems. Freight companies, though, are particularly susceptible to cash strains. Between high fuel costs, vehicle repairs, and taxes, transportation businesses are vulnerable to the problems that come with low cash reserves. If your company is operating close to the red line, all it takes is one unexpected cost to derail your business permanently.
If you've been worrying about how to boost your cash flow, freight bill factoring may be just the answer you've been looking for. But, what's involved in freight bill factoring? What are the benefits of freight bill factoring?
How Does Freight Bill Factoring Work?
Transportation factoring is basically a cash advance funding arrangement that allows company owners to sell off their customer invoices and receive a lump sum payment for the value. When a company factors its freight bill, it also releases the responsibility for collecting from the customer. This frees the business owner from having to make collection calls or track payments. Instead, the factoring company collects the payments from the customers and remits the rest of the invoice to the business after deducting its fee.
Why Freight Bill Factoring is of Benefit
What makes freight bill factoring so convenient? There are several advantages to using transportation factoring. One benefit is the ready access to funding that this arrangement provides. Instead of having to apply for a new loan every time you run into difficulty, you can just factor a larger amount of invoices the next month to increase your cash flow. Since you can choose how many of your invoices to factor each month, you also have a flexible cash flow limit. On the other hand, using a bank loan or a credit card restricts you to a hard limit that may put a crimp in your business plans.
Transportation factoring is not a loan, which means that you can apply for it without having to worry if you'll pass the credit check or if you'll have to save up for a deposit. As long as your customers have a good payment record, you're practically assured of getting accepted for factoring.
Do you think that freight bill factoring would work for your company? If you need to find a sure source of funding to cover unexpected costs or the price of your business expansion, then the benefits of freight bill factoring may be enough to help you take your company to the next level.