| If you are running a small to medium freight | | | | credit rating of your customer as decided by the |
| company, then you must be losing sleep, worrying | | | | factoring company and the total volume of business, |
| about getting cash on time to meet your expenses | | | | you give to the factoring company. So, if you are |
| and getting your payments from customers on time. | | | | giving more than 30 days credit to a customer, who |
| This is where freight factoring can help your business | | | | is rated low on the factoring company's credit rating |
| go from slow to quick growth. | | | | list, then the fees will be the highest. |
| When you haul freight for your customer or freight | | | | That could reduce your profit margin substantially. |
| broker, you would be issuing a freight invoice. You | | | | The freight factoring company should also be able to |
| would then wait for 30 to 90 days depending on the | | | | handle your account efficiently and since they could |
| credit given to your customer, for your payment to | | | | also be taking over your payment collection from |
| arrive. Freight factoring companies will "buy" this | | | | you, they would have to behave courteously with |
| freight invoice off you and give you the invoice | | | | your customers or they could end up damaging your |
| amount immediately. This payment will be in 2 | | | | reputation and relation with your customer. Your |
| installments. The first installment will be transferred to | | | | customers will also have to be informed about your |
| your account in 2 to 4 days and could be upto 90% | | | | tie-up with the freight factoring company and some |
| of the invoice value. The 2nd installment will be the | | | | of them might not be very comfortable in dealing |
| balance amount and will be transferred to your | | | | with third parties. |
| account after your customer makes the payment on | | | | These problems could crop up, once you hire the |
| the due date, minus the 'factoring fees'. | | | | freight factoring company. But, if you keep an eagle |
| This means that you get your money almost | | | | eye on their operations, you could quickly diffuse any |
| immediately after making the invoice and this ensures | | | | tricky situation without ruffling too many feathers. |
| that you can meet your expenses with ready cash. | | | | Some factoring companies also offer 'non-recourse' |
| This will enable you to pay off your fuel bills and | | | | factoring, whereby any customer defaulting on his |
| salaries on time and also enable you to take on new | | | | payment will be the factoring company's problem and |
| and bigger hauls, thereby increasing your business. | | | | not yours. This will help you in concentrating more on |
| This will mean increased credit freight invoices and | | | | increasing your hauling business, rather than losing |
| consequently more business for your freight factoring | | | | sleep over bad debts. However, any additional |
| company, and again more cash payments for you. A | | | | service including this one from the factoring company |
| winning combination indeed, but you should be careful | | | | will cost you more. You will have to decide finally, on |
| about some points, while hiring the services of a | | | | which services you would require from them and |
| freight factoring company. | | | | which you don't. |
| The 'factoring fees' could be from 1.5% to 5% of | | | | So, freight factoring can be a boon for your budding |
| the total invoice amount, depending upon various | | | | freight business, but you should also understand the |
| factors such as the credit period of the invoice, the | | | | risks and charges associated with it. |