Are you a Freight Broker? Learn How to Grow by Financing your Freight Bills through Factoring

Financing your freight bills through a factoring company is a great way to grow your freight brokerage. The financing process is easy and simple, but the benefits of this type of company go beyond just being able to afford bigger invoices. Here are some of the reasons why you should consider it:

1. You get paid on the sale (Factoring companies have to pay you before they send any money though).

2. You receive money before your customer receives it (factoring is a buyer's market and since you are very often the last party to get paid, you practically always get what is owed to you).

3. Factoring companies only deal with invoices for freight; therefore, some of your bills will be guaranteed by factoring because there is not as much risk involved in shipping.

4. A factoring company can give you a deal on the factored debt which will be applied to the account.

5. There are no restrictions on your accounts receivable (many companies will not take freight as they do not feel as though they can collect).

6. You may be able to sell some of their open invoices without contacting your customer and dealing with them directly (your customers are then able to get money faster).

7. Your business is a long-term relationship based on trust (the credit life cycle is very long and there is a good chance that the factoring company will do business with you for years).

8. You will have better negotiating power with your suppliers, which means that they will offer you better credit terms.

9. You will have less fraud since the factoring companies are the ones taking care of the invoices and billing processes.

10. You can negotiate a specialized factoring program that will work best for your business (this includes different payment options, letters of credit or working capital loans).

11. You can get an account review (factoring companies consider each individual factor separately) if there is any discrepancy in the amount of money you are to get back from them and your customer.

12. Your invoices need not be paid on delivery if you are using a factoring company.

13. You can buy the factoring company out and make more money for your business (using a factoring company as a financial partner is an ideal way to raise capital without selling shares in your business).

14. You may be able to make more money by dealing with the factoring company directly or by doing mail-order sales, or even having your customers pay you over time.

15. You will have access to a pool of companies and know that there is someone backing up your invoices if you sell them (not all customers will pay, but many do and this helps keep cash flow steady).

16. Having a factoring company as your partner can increase the size of your business, as they will be able to help you get access to customers that you might not be able to otherwise.

17. The factoring companies are very good at finding new customers and collecting money from them (they have many options, such as trade credit repair, debt collections and credit restoration).

18. You are not penalized by the factoring company if you do not collect enough money from invoices (a factoring company will look at each individual case to determine whether or not they should pursue it or close it out themselves).

19. You will save money by having the factoring company handle your invoices for you.

20. The factoring company will make it easier for you to get your product to market (they can work with many different companies and help get you to a larger audience).

21. You can then use the cash from the factoring company for other purposes.

22. Should you end up in court, the factoring company has a lot of experience and resources to help guide you on how to manage the administrative processes involved in litigation, from determining whether or not they want to file suit, obtaining evidence and filing papers, getting papers served and collecting on judgments.

23. You have access to the factoring company's past customers and can ask the sales and marketing department of the factoring company for information regarding who may be suitable for your products.

24. You can take advantage of a much greater market through the factoring companies by dealing with them directly or by selling their invoices.

25. The factoring companies give you access to an abundant source of working capital that you can use to buy more inventory, hire more staff and expand into new markets.

26. A due diligence process is done on all invoices by the credit department of the factor before they are purchased, which means that they will have a consistent flow of money coming in (providing you with working capital).

27. Most factoring companies will give you a much lower interest rate than if you were to get the financing elsewhere (this is true especially when using a factoring company that specializes in freight invoice factoring, such as http://www.factorsource.com ).

28. You will have access to a previously ignored market of potential customers by selling off your invoices to the factor (factors buy invoices from other companies).

29. You may be able to get a better price on your invoices – you price them based on how much money is due and then sell them for more than what the customer actually owes you; this is especially useful for those businesses that are not considered creditworthy but still want to do business.

30. You will not be able to manage your accounts receivable nearly as well if you are not working with a factoring company.

31. Your credit rating may increase because of the factoring program (it is important to note that this is something that has to be done over a longer period of time).

32. You can use the cash for other expenses in your business, like expanding into new markets or introducing new products and services.

33. There is an added layer of protection in dealing with the factoring companies and having them work on your behalf in dealing with your customers (there are established rules and procedures to make sure that everyone gets paid).

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Conclusion

It is important to note that it is up to you as a business owner how you structure your factoring relationship with your factoring company. There are many ways that this can be accomplished, and you should always shop around and make sure you are getting the most competitive rates and terms. In order to help protect your business interests, you may want to consult with an attorney who specializes in both the areas of commercial law and lending practices.

If you are interested in learning more about factoring, then check out our website at http://www.factorsource.com .