Freight transporting is a service that requires the utmost patience for both senders and receivers. It usually takes between one to two months for a freight’s contents to be packaged, processed, and sent to the recipient. On the senders’ end, that means it takes that amount of time to get fully paid for their services, too.
These concerns are why a factoring company is essential in streamlining the process to be more efficient and effective. Also known as freight factoring, these companies enable freight providers to access their funds at a much faster rate by selling the invoice to a financial company that does factoring.
This is done by selling the job order invoice to the factoring company, which pays 80 to 90 percent of the amount. For the recipient to receive the items, they must pay the factoring company a security fee, refunding the remaining balance minus discount fees once the entire transaction is complete.
While it sounds complicated, this streamlined process offers five fantastic benefits for businesses, namely:
1. Same-Day Cash Flow
Small and big companies receive instant funds, so their financials are regularly in the green. There is no need to dip into emergency funds while waiting to get fully paid after a transport job is done. A factoring company makes it easier to manage the more important aspects of your business.
2. Debt Avoidance
Having instant cash doesn’t just prevent you from dipping into emergency funds to stay afloat. It also means companies don’t need to go into debt to pay for salaries, fuel, repair costs, and operational expenses. The first benefit directly impacts the second; a same-day cash flow means you have money to keep your business running!
3. Flexible Financials
Without a factoring company by your side, borrowing or extending a credit limit while waiting for your payment takes time. Depending on your credit scores, there are limits to how much you can borrow or extend.
However, this is not the case with factoring companies. As long as your partners and supplies have good credit, they can take in small or large delivery jobs for your business to grow with the increasing demand without any delays.
4. Credit Check Assistance
Another bonus of a factoring company is the credit check assistance they offer. This doesn’t mean they’re going to check your credit to see if you’re good to work with. Instead, part of their service is checking your customer’s (the receiver) credit for you! They’ll assess the work assigned to them and provide you with information that can lower costs or maximize future job orders.
These credit check services provide a sense of security since they account for what the customer can pay for and make that work in their favor.
5. Equipment Assistance
Lastly, a factoring company provides relatively new freight providers with equipment loans! Trailers, lifts, and cargo straps are just some of the provisions available when working with freight factoring providers. These allow freight companies to focus on their actual service instead of worrying about where to get them and how much they need.
The terms are accessible, too! They can finance around 90 percent of equipment acquisitions with a loan period of up to 48 months! In this manner, freight providers can continue servicing the transport needs of customers and gain immediate cash flow to grow their business even further!
The Last Stop
The freight industry is fast-paced. You need modern solutions to reduce inconveniences between you and your customers while expertly managing continued growth. A factoring line of credit makes this possible. Hiring a provider today could just save you from countless hassles and improve your ROI in no time!
In need of a factoring line of credit? Reach out to us here at Porter Capital! We’re a factoring company that offers solutions to multiple businesses and industries nationwide! Since our inception, we’ve provided over $6 billion in funding to give companies the growth they deserve!