If you are not familiar with freight bill factoring there are five key things you should know about the process. There is a lot of misconceptions when it comes to freight bill factoring. Factoring financing can be a valuable tool if you know how to use it.
An invoice advance loan can be a great way to raise the capital you need without the hassle that you normally would have to deal with. Understanding invoice factoring services can help you to make an informed decision.
Is Factoring Financing Right for You?
Freight bill factoring can be the easy solution that your business needs to raise capital. Invoice funding companies specialize in helping small, medium, and large businesses turn their open invoices into usable funding.
If you are tired of waiting for your invoices to be paid or struggling to have the capital that you need on hand to reinvest in your business, invoice funding companies can help to bridge that gap.
5 Things You Need to Know About Invoice Factoring Services
There are 5 key facts that you need to keep in mind when you are making decisions about whether freight bill factoring is right for your business:
- This is not a traditional loan instrument. You are not actually taking a loan in the traditional sense. You are selling your debt which can be an exceptionally good thing. You do not have to make a long-term payment commitment, pay exorbitant interest, or make monthly payments. It is more of a transaction than a loan.
- There are fees associated with the process, but you do not pay out of pocket for the fees. Let us say that you have an invoice for $10,000. You may be able to get paid as much as 98% of the face value of the invoice in cash. Depending on the factoring financing company, the “fee” can range from 1%- 5% (sometimes higher in some cases). For an invoice of $10,000 with a 2% fee, you would receive $9,980.
- There are other benefits besides getting the cash you need. You no longer must worry about collections. The invoices that you sell to the factoring company, become the factoring companies’ collection problems.
- What is the risk? In most cases, you assume no risk. What does that mean? It means once the invoice transaction is complete, you are no longer liable for the money.
- Qualifying is easy. Credit problems are not a problem with invoice factoring. Qualifying is simple. If you have invoices that have been outstanding for 90 days or less, you may be eligible for a freight factoring program.
Factoring companies are typically industry-specific. Connecting with an invoice factoring company that specializes in freight factoring is your first step in getting the money you need.