It’s a flexible financing option. Bank loans and credit cards limits you in various ways, while factoring is based on monthly amount of invoices.
LEARN 12 SECRET STEPS HOW TO MAKE $950 MORE PER TRUCK / MONTH
Hey! I'm George J.Magoci and I will send you a FREE eBook where you can learn 12 secret steps how to make $950 more truck/month.
Since the factors offer is determined by security of your customers paying habits, freight factoring is pushing you towards a good healthy business relations.
Other benefits of using freight factor:
- Covering the expenses on time
- Getting more loads much easier
- Expanding your customer base
- The initial advances are very high – more than 90%
- It works with fuel cards
- Growing your revenue
It’s not rare that small business don’t match the criteria when applying for a loan. In that case, factoring is the only option to deal with cash flow problems.
Also, one other important moment is the fact that freight factoring is not a loan, meaning that you are not diving into debt.
How Much Freight Factoring Costs?
After the filtering and making your list of optional factors, your aim is to pick one with the best terms. Keep in mind: the factoring rate is not equal to your costs.
Total costs of freight factoring depends on:
- The factoring rate
- The factoring advance
- Extra fees
- Credit of your shippers and brokers
Tip: You need to convince your factor that financing your business is a low risk to them. The lower risk the factor asses, the lower costs you will have.
Maybe you are thinking now, if the freight bill factoring is such a right solution, why the big companies rarely use it?
Firstly, it’s a misconception that the big corporation don’t use it. They do, but they don’t need it that much, for their money muscle allows them to afford long waitings.
Furthermore, big financial institutions like banks are providing them all the services they need, while tight ropes are reserved for the beginners and small businesses.
The truth is that freight bill factoring is the better option for smaller trucking businesses, but not in a way that you chose it because you’re not good for the bank, but for it’s flexibility, quick response and a lot additional options they are bringing.
Finally, when it comes to picking the right factor between hundreds of registered companies, there is no pointing to right direction. It all depends on your needs. Earlier mentioned questions, can help you in choosing your factor, or you can rely on bidding platforms to find the right match for you.
Any experiences with the freight factoring companies? How do you manage your cash flow?