While both types of factoring can improve your cash flow, recourse factoring presents some of the same challenges you had before you started factoring. With this type of transportation factoring, you don’t need to worry about having to cover your customers’ debts. they file for bankruptcy), you are not held responsible to repay the factor. This means that if your customer doesn’t pay for credit reasons (e.g. With non-recourse invoice factoring, the factoring company assumes the credit risk and provides credit guarantees on all factored invoices. This means that you must be able to afford bad debts, should they occur. In other words, if your customer doesn’t pay for any reason, you must repay the factor the amount they advanced on the freight bill. With recourse factoring, there is no credit protection. There are two types of invoice factoring: recourse and non-recourse. Some factoring companies allow you to decide which invoices you want to factor. With greater cash flow, you have more capital for hiring drivers, purchasing new trucks, marketing and other investments that help you grow faster. Factoring won’t put you in debt or affect your credit score. Pay bills on time and make payroll without delays. Cut back on the hassles and costs of processing invoices and collections. The more receivables you have, the more you can factor. The amount you can factor is based solely on the value of your invoices. You can receive cash in as little as 24 hours. Here are some of the top benefits to truck factoring your invoices. The factoring company will collect payment from your customer, usually within 30-60 days.īenefits of Transportation Factoring and Truck Factoring.The factoring company will advance you up to 95% of the freight bill, usually within 24 hours.The factoring company will forward the invoice to your customer and verify the load was delivered.You haul your loads and submit the freight bill to the factoring company instead of your customer.The truck factoring company will establish a credit limit based on your customers’ credit and the size of your invoices.
How Truck Factoring Works in Five Basic Steps The factoring company is more concerned with the credit history of your clients as they are the ones who are paying. Unlike other types of financing, such as bank loans, you don’t need a long business history or pristine credit to get approved for transportation factoring. The truck factoring company provides you with up to 95% of the value of your invoices and takes responsibility for collecting from your clients. Transportation factoring or truck factoring is a way to sell your unpaid invoices for immediate cash. You need cash to pay drivers, maintain your vehicles, purchase fuel and cover other business expenses. Truck factoring services is a way to ensure that you always have cash on hand. As with most businesses, you probably experience fluctuations depending on the time of the year and economic conditions. Freight and trucking companies depend on healthy cash flow to stay on the road.
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