| Trucking and logistics are good businesses to be in, | | | | their customers. |
| but at the same time they are very cash intensive. | | | | Factoring works in a very simple way. When a |
| Trucking and logistic companies have to deal with | | | | trucking company delivers the goods to the |
| ever rising fuel prices, driver payments, repairs, tire | | | | customer, it raises a freight bill. The factoring |
| purchases and other operational expenses. These | | | | company buys the freight bill and pays the |
| expenses are a constant drain on the finances of | | | | transporter 90 to 95 percent of the freight bill. This |
| these companies and are unavoidable. Most | | | | advance can be used by the company to meet its |
| customers of trucking and logistic companies do not | | | | expenses and pay its suppliers. Once the trucking |
| pay before 30 days of raising the freight bill. In fact, | | | | company's customer pays the factoring company the |
| most of them pay after 30 to 60 days of raising the | | | | full freight bill amount, the balance payment due to |
| freight bill. This is a challenge faced by all the small | | | | the trucking company is paid by the factoring |
| and medium trucking and logistics companies in North | | | | company after deducting a small fee. |
| America. Unless the trucking and logistics companies | | | | The cost of factoring varies from company to |
| are cash rich with deep pockets, they are likely to | | | | company. It could be anywhere from 1% to 3.5% |
| run into financial problems sooner or later. | | | | per month. The cost of the factoring depends on a |
| Most company owners try and obtain finance from | | | | number of factors like the industry the trucking |
| their bankers to tide over this cash flow problem. | | | | company deals with, the credit worthiness of the |
| However banks very rarely provide finance to small | | | | trucking company's client, and the credit period |
| trucking and logistics companies. Moreover a business | | | | extended to the customers. |
| loan is not the solution to this problem. Fortunately, | | | | Freight factoring is in fact an extension of the |
| there exists a solution available for such companies | | | | trucking company's business. It offers an easy |
| that they can use to overcome this problem. This | | | | alternative to bank loans. The trucking company does |
| solution is called freight bill factoring! Factoring can | | | | not have to give any collateral security and interest. |
| provide logistics and transportation companies with | | | | Freight factoring is flexible as the advances increase, |
| finance that helps them meet their recurring | | | | as more freight bills are submitted and factoring fee |
| expenses and help them grow. | | | | gets reduced once the turnover increases. |
| Obtaining a loan from the bank is difficult and a | | | | Freight factoring provides instant finance to |
| cumbersome procedure. Freight bill factoring is easy | | | | transportation and logistics companies, thereby |
| and a factoring line can be set up in a matter of | | | | creating a cash flow for their smooth operations. |
| days. Factoring is making advance available on slow | | | | Freight factoring companies enable small and medium |
| paying freight bills. Factoring enables the | | | | companies to focus on their core activity and grow |
| transportation and logistics companies to meet their | | | | rapidly. |
| expenses while waiting for their bills to be paid by | | | | |