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