Freight bill financing has been gaining popularity as a way to finance a growing transportation carrier or freight brokerage because many shippers and clients are paying their freight bills more slowly – taking as long as two months to pay. Most small carriers and owner-operators are not financially prepared to handle this payment delay.
This article helps you understand the most important benefits of freight bill financing.
Benefit #1: It improves your cash flow
The most important benefit of freight bill factoring, and the main reason why companies use it, is that it improves your cash flow. Instead of waiting 30, 40, or even 70 days for clients to pay for a load delivery, you get immediate payment from the freight financing company. This accelerated payment has a dramatic effect on your cash flow, allowing you to handle short-term expenses. But, more importantly, it enables you to make long-term investments that help grow your freight company.
Benefit #2: It improves the performance of your invoices
As part of their services, factoring companies check the commercial credit of your current and prospective clients. This service allows you to offer terms strategically – only to accounts that have a very low chance of default. This strategy improves your cash flow and minimizes the time that you spend on collections.
Benefit #3: It helps increase sales
When used correctly, a freight factoring line can help you increase sales. How? Factoring allows you to take on customers that pay slowly. If you have declined this type of customer in the past due to cash flow concerns, factoring receivables can fix that and allow you to take on new clients.
Benefit #4: It’s easy to get
Unlike most business financing programs, factoring does not have difficult qualification criteria. The most important requirement is that you work with customers that have solid commercial credit, since the invoices are the collateral that is funded. Aside from that, your freight bills must be free of any legal or tax encumbrances.
Benefit #5: You can get it quickly
Most factoring lines can be underwritten and deployed in days – not weeks. You can use this type of financing if you have a cash flow emergency and need funding quickly. However, quick deployments can happen only if the factor gets all the proper documentation quickly and if they are able to set up the accounts and verify freight bills in a timely manner.
Get more information
We are a leading freight bill factoring company in Canada and can provide competitive terms. For more information, get an online quote or call (877) 300 3258.