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.