Freight bill factoring is simply a legimate, widely used, financial transaction that converts outstanding receivables into immediate cash.
Unlike a bank loan, funding is available without borrowing money or putting up any form of collateral.
Accounts receivable on the trucking company books are sold at a small discount to a third-party financial company, known as a “factor”, who advances a large percentage of outstanding invoices within 24-48 hours. Trucking companies no longer have to wait 30, 60 or 90 days for the clients to pay.
There are two main types of factoring, recourse and non-recourse for trucking companies. The difference between the two methods is which party becomes financially responsible for an unpaid debt.
With recourse factoring, the trucking company is ultimately responsible for outstanding debts. In these instances the factoring company will look to the trucking company to reimburse any advanced funds on unpaid invoices.
The reimbursement may be taken from any balances due to the trucking company or deducted from advances on new invoices submitted for factoring.
Before seeking reimbursement everything possible will be done to obtain payment from the customer to avoid any cash flow problems for the trucking company.
Courtesy calls from to the customer usually start about 30 days from date of the invoice.
If, after 90 days, the factor has not received payment from the customer they will discuss recourse with the trucking company.
As the trucking company is ultimately responsible for debts, factoring fees for recourse transactions are lower.
With non-recourse factoring for trucking companies the factor is responsible for the debt. If debts are not paid there’s no recourse on the trucking company and the factor is fully liable. Any advance made to the trucking company on unpaid invoices is not refundable.
As there is more risk with non-recourse transactions, a slightly higher factoring fee is involved. Despite the higher fee, non-recourse can still be a wise financial decision if you have customers with a slow or bad payment history.
Non-recourse still offers all the benefits of factoring but without the worries of any potential bad debts. The higher factoring fee for non-recourse can be viewed as a form of insurance against bad debts.
“Not all transactions have to be either recourse or non-recourse. Trucking companies can decide which invoices or clients are recourse transactions and which are not. This keeps factoring fees to a minimum and more money remains in the trucking company pocket,” states Keith Hunt, V.P. of Marketing for Get Factoring For Trucking Companies.
“We understand, at first, factoring may be considered a big step, that’s why we offer a free, no obligation, confidential telephone discussion. During the conversation we will answer all questions about the factoring process as it pertains to your trucking company so that trucking companies can make an informed choice,” concludes Hunt.
About Get Factoring For Trucking Companies
As an industry specialist provides freight bill factoring for trucking companies. By partnering with owner/operators and trucking companies that operate larger fleets of vehicles the company is able to solve cash flow problems. A positive cash flow allows trucking companies to meet their own payables such as fuel, maintenance, insurance and payroll in a timely manner.
For more information on freight bill factoring for trucking companies please call 209-225-2852.
Company Name: Get Factoring For Trucking Companies
Contact Person: Keith Hunt
Email: Send Email
Country: United States