Transportation Carriers need a better way to Finance Growth

The last few months have been great in terms of the economy bouncing back. If you own a transportation Company You will see more business within your industry. It has been a long road for the trucking industry…no pun intended.

 

 

Although we see the economy coming back to life, it is harder then it was previously for suppliers to pay freight bills. Because of this shippers are slow to pay back invoices. Transportation companies were once receiving payments on their invoices in 15 days. Now the same shippers are paying their bills on  self-assumed net 30 to net 90 terms.

As a business owner you know this creates a cash flow disaster. Transportation companies must  continue to pay their operating expenses whether they get paid in 15 days or 90 days. This leaves management in a tight situation they must meet payroll, expenses, rent ect. If not addressed with a solution we see transportation carriers decline in growth, and even worse file for bankruptcy.

We do have a solution to all of this doom and gloom, and it is called freight bill factoring. Before you consider freight bill factoring think about putting some pressure on your customers first. My suggestion would be to offer your customers a discount if they pay their bills earlier. This may work better than getting aggressive over the phone (bad idea)

Freight bill factoring is a steady alternative, now let me tell you why. When you deal with a factoring company you get cash for your invoices within hours. This process is also known as invoice discounting or accounts receivable funding. For less than 1% fee on the invoice a factoring company will advance you the cash and contact your suppliers directly to collect on your behalf if you chose. If you prefer to keep control of the collection this option is available as well. You can reduce the length of time it takes to get paid on your freight bills greatly by contacting a factoring company to handle your overdue invoices.

Freight factoring works like this…your invoice gets paid in 2 installments. After contacting a factoring company such as NeeBo Capital you will get 90% of the invoice amount in cash into your account within hours. This really just takes hours and the factoring company does not care about your credit history, just your customers.

The second installment of freight factoring give you the 10% left over after it is collected. After the second installment is collected the factoring company takes its 1% fee. Now from a business stand point this option is favorable because the factoring company fee is so small, and they do a great deal of legwork for that percentage. Freight Factoring is the choice option for transportation carriers looking to collect payments on their shipments immediately.

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The History of Factoring Def, How Factoring Invoices Started…

Believe it or not Factoring Invoices is older than the last 5 presidents combined! If you still can not define factoring then you are most likely a business who is not using it as leverage. Almost all fortune 500 companies’ factor invoices to better manage their cash flow.  Neebo Capital is one of the top picks for US Fortune 500 companies.

Factoring def  goes like this…

The arrival of the well-known business practice of factoring invoices began since the inception of commerce that dates back 5,000 years. The earliest recorded factoring transaction of invoices was dated sometime before the revolution in the US when cotton, animal furs, timber and other materials were shipped from the colonies to Europe’s continent.

This was a way for ship sailors to carry on the harvest in their new land,  where merchants  awaited to loan their finances to the colonists.  We also see factoring def of invoices throughout the Industrial Revolution when factoring became more focused on credit when they assisted clients in determining the creditworthiness with their customers and setting credit limits.

The method of factoring invoices has been greatly approved over the years. We now have the ability to give instant quotes to potential factorees and loan then cash for their receivables within hours. Visit Neebo Capital and get an instant quote with rates as low as .59%.

 

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Let us Define Factoring differences & Bank Loans

 

Many businesses understand poor cash flow management can have an impact on operations. This article as based on defining factoring. Factoring is not a widely known concept. However there are many benefits that can come with factoring including a stronger cash flow.  If you wonder what is the difference between a bank loan and factoring invoices this article is for you.

Factor companies such as Neebo Capital make funds available within 24 hours, even when banks are not willing to lend you the cash, because factor companies focus first on the credit worthiness of the debtor, the party who is obligated to pay the invoices for goods or services delivered by the seller. Meaning your customers financial strength determines eligibility.

Banks on the other hand, the necessary emphasis in a bank lending relationship is on the creditworthiness of you as the borrower, not that of your customers. The key terms and conditions under which the small firm must operate differ significantly. To define factoring it is important to explain conditions involved with factoring invoices.

For medium and small businesses, their choice is slowing their growth or the use of external funds beyond the banks. Thus seeking venture capital to aid growth , which is difficult and you give up ownership, Or factoring invoices which is immediate, typically low cost to the business and lowers risk while building financial growth.  When considering combined cost and availability of funds and services perspective, factoring creates wealth without giving up ownership.

So now we see it is more beneficial to factor invoices rather than seeking venture capital. However let us define factoring a bit deeper.  Through factoring invoices access to cash can be obtained in a matter of a week or two, whereas securing funds from venture capitalists can typically take up to six months. Factoring is also used as bridge financing, while your business pursues venture capital and in conjunction with venture capital to provide a lower average cost of funds than equity financing alone.

Many businesses seek to take advantage of factoring invoices along with angel investments and bank loans. This is a solid way to cut down your total costs of funds while strengthening your cash flow.

Factoring invoices is a very attractive alternative to raising money for small fast-growing businesses. This process is also great to turn around an established that is having management troubles, or dealing with difficulties in the economy. Factoring invoices allows extra time for management to focus on growth and not worry about collecting invoices.

Business who cannot define factoring may view it as a last resort. However if used properly factoring invoices can create wealth needed to grow operations at costs of less than 1%. Large companies take advantage of factoring invoices to show cash on their balance sheets. We define factoring to help smaller organizations understand what the larger firms do; overdue receivables can harm operations.

Webster dictionary will define Factoring as a method used by a firm to obtain cash when the available cash balance held by the firm is insufficient to meet current obligations and accommodate its other cash needs, such as new orders or contracts. If growth or even trouble meeting pay-roll is an issue factoring your invoices is a great option.

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