Know About The Nuances Of Factoring Services

If you are a truck operator commercial bank cannot assists you to tide over operational finance. At best, banks can finance you to meet capital costs, such as buying a truck; but for truckers this may not be enough, what with the shippers taking quite a long line of credit, sometimes as much as sixty days. Meanwhile, there are dozens of payments to be made, drivers’ salaries, repair costs, buying tires, paying insurance and so on. Freight bill factoring, fortunately, is one help at hand for motor carriers. You may be a large fleet owner or even a small freight carrier with just a couple of vans; as long as your business is transporting goods, you can take advantage of the advance payment facility offered by freight bill factoring organizations. A question that always comes up when an enterprise is thinking about its factoring accounts receivable is: “What happens when one of my clients can’t pay, or won’t pay a bill I have sold to a factoring firm?”  A right answer to this question relies on the content of the mutual agreement that is in place. As per the 2009 survey taken by the International Factoring Association, around 79% of the factoring service companies deploy recourse factoring. Other firms use non-recourse as well as a hybrid with both mixed. One can learn more about this mixed-bag factoring model can browse the web world for additional inputs.

Know the system of operation

First step is to scout around and sign up with a suitable freight bill factoring company. Preferably, select a company that is owned and run by people who are or have been truckers. Experience in the transportation industry makes the outfit to gel with your unique needs better- more about it a little later. Each time you pick up a consignment, get the freight bill counter-signed by the shipper and courier it to your freight bill factoring company. A good factoring company would even provide convenient drop boxes, (where you can ‘post’ the bill) and subsidize the courier charges. Once the bill reaches them, the company will credit as much as ninety percent value, immediately to your account. When the shipper settles the full payment, your freight bill factoring company will release the balance of ten percent to you. In this transaction, obviously, both you and the shipper should be on your factor’s approved list. Such a method can offer the business owner an improved cash flow for the operation.

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