Discover How Freight Bill Account Receivables Factoring Can Keep Your Trucks On The Road
Freight companies move goods for customers around the country and across the world. Most of these customers expect a 30 day line of credit to be extended to them which means the freight companies must finance trucks, drivers and fuel until such time as they collect the cash from their customer. It’s not hard to imagine that this puts a huge strain on the cash flow of the transport company.
Freight bill account receivables factoring is a solution offered by commercial finance factoring companies such as West Asset Management. Invoice factoring basically eliminates the waiting period between issuing the invoice and collecting the cash due. The process of organizing commercial finance factoring is not complex. Once an arrangement is in place the day to day running of the scheme is straightforward. The invoice is raised in the normal way and sent to the customer and it is then sold to the commercial finance factoring company for around 90% of its total value.
An original papertrail is required by most commercial finance factoring companies so it may be necessary to make alterations to what documentation is left with customers and what is retained by drivers, but that is a small consideration when compared with the benefits of effectively reducing debtor days to zero.
There are of course charges which freight companies have to meet. These are typically somewhere between 1.5 and 3% of the freight invoice value. Charges are based on a number of factors including the credit worthiness of customers and the volume of transactions to be included in the invoice factoring arrangement.
It should go without saying that all business paperwork must be kept in good order but it is even more essential that company documentation is original and complete when applying for freight invoice financing, especially if the freight company wants a speedy response from the financing company it contacts for help.
Invoice factoring is not a collection method for bad debts. Commercial finance factoring is a mechanism whereby a percentage of the value of current debts can be paid more quickly to the freight company in order that it might meet its own financial obligations.
Truck drivers are not renowned for their patience. They have a not unreasonable expectation that they will be paid on time. By implementing a freight factoring scheme it is possible to finance growth of a transportation business. New customers can be taken on with more confidence knowing that credit and background checks have been undertaken by the factoring company.
Even administrative burdens are reduced as the factoring company will chase and collect the debts when they are due to be paid. There are no more difficult phone calls for the freight company manager to make.
