You shouldfactor freight billsin order to provide liquidity to your trucking business. Typically, cash flow problems can occur when a trucking company has to wait for a period of 30 to 60 days to get paid.
Therefore, when you factor (sell) your freight bills your trucking business receives an immediate cash injection from Capital Depot, rather than having to wait for a payment.
Furthermore, when you decide to factor (sell) your freight bills it eliminates the risk of not getting paid by a broker or shipper.
Now the instant cash that is provided by factoring (selling) your freight bills, can be used for whatever reason your want, such as:
If you own a trucking business, or plan to start one - then Freight Bill Factoring could well be a viable component in achieving your overall business goals. But you can’t use it if you don’t understand it!
Freight Bill Factoring has been referred to as the financial backbone of the trucking business. Why? Because Freight Bill Factoring is the one financing alternative that makes it possible for business to secure additional financing capital that might otherwise be unavailable.
The freight bill factoring process itself is quite straight forward – it simply involves the purchase of bill of ladings at a discounted rate. The resulting scenario is truly a win-win situation – both for the trucking company receiving the funds and for the broker that is paying the invoices.
Freight bill factoring has a long rich tradition. In fact, almost every civilization that has engaged in commerce has also engaged in some form of factoring. For instance, during North America’s colonial period business relationships had to make cash advances against an Accounts Receivable in order for a business to continue with commercial operations before their users were paid for their goods. Yes, they were engaged in Factoring.
Over the years Factoring has become more sophisticated. It is now more focused on credit worthiness, financial management and on collections, but the fundamental idea of purchasing Accounts Receivable has remained intact. Today, a factoring company can do much more than just funding – factoring specialist can assist a client in verifying customer credit worthiness by evaluating and setting credit limits and in managing A/R collections professionally.
Across North America Factoring companies exist in all forms, servicing industries and business sectors of all types. And many large financial institutions actually have Factoring divisions, but for the most part, Factoring companies are smaller, independently owned enterprises.
As for the commercial banks any business owner knows that they have become increasingly inflexible, with much stricter regulations and with ever changing lending criteria. Small and medium sized businesses have been forced to search for alternative sources of financing and Factoring has become a popular option. It is a workable, solution based opportunity that provides an alternative when conventional means of financing just aren’t available. And as banks become less and less friendly to the small business owner, Factoring looks better and better as a financing remedy.
Around the world the Factoring volume has already exceeded the trillion dollar mark and with companies operating on every continent just in the last 4 years, factoring transactions worldwide have increased by 60% - That’s why we call it the best kept secret in financial services.