What Is Freight Bill Factoring

This is actually a type of financing that aims to support transportation companies, brokerages and carriers having problems with their cash flows. Freight bill factoring helps shippers to slowly pay their bills. It is also able to make a solution to the shippers’ cash flow problem by way of providing funds they need to operate a trucking business.

A lot of trucking companies get into trouble with their cash flow because many shippers as well as all other clients do not pay quickly. So what shippers do to remedy the problem is to avail of the freight bill factoring scheme. They knew that their services would be paid only after 30, 40 or even 60 days. If you are also the owner of a shipping company, it’s up to you how to keep your business running. Remember that you are paying your fuel every day, repairs and your drivers. Otherwise, your drivers would stop working and find other good-paying job opportunities in competing companies. In fact, a friend once told me that the problem lies on some shippers having no enough money in the bank to sustain their trucking and shipping operations, while they are waiting for payments from their clients. As you know, these concerns have been hitting small and fast growing companies very hard.   

Business analysts said one of the solutions to this dilemma, is to finance your transportation freight bills, instead of waiting for the 60 days period, to a factoring company that is able to give advance of a large portion of money that is owed to you by shippers. This method is very helpful, in the sense that it is able to give you immediate liquidity which you can use in paying your expenses in business. Here, the transactions usually conclude once your client pays his freight bill on a regular payment schedule.

This solution is able to put your trucking company cope up the challenges and also put your company on a solid financial footing with competitors. This also help provides the company’s cash flow, enabling your company to operate smoothly, without having problems to sustain the trucking and shipping operations.

As you may know, there are 2 ways to structure your transaction and you can either get a full advance transaction or in two installment schemes. There are small companies that tend to avail of the so-called full advance transactions while those firms that are considered larger companies go for installment transactions.

Meanwhile, the full advance transaction is pretty amazing yet simple. Here, the financing company is going to buy your invoice. The single payment, usually vary from 93% to 95% of your invoice. Usually, the service charge is flat fee. This is freight bill factoring in the making, right?  

There are two installment transactions to fund your invoice. In fact, it divided in two steps called rebate and advance. The rebate that usually covers the remaining 10% ( less the fee) is done thru wire service, once there is full payment made by your client. The advance scheme is usually provided as soon as the load is safely delivered and verified.

Learn more about freight bill factoring at http://k1factoring.com