If you’re one of the freight broker companies in the country today, then you might already have a lot on your plate since your business is acting as a sort of bridge between the shippers and carriers. However, even if you’re already extremely busy with your daily operations, wouldn’t you still want to continue expanding your business more quickly?
When there are so many shippers involved with your company, it can become very tedious and challenging to manage all their invoices. And the task gets even more overwhelming when these shippers choose payment terms ranging from net 30 to net 90.
Therefore, if you want to expand your transport business quickly, you must consistently invest funds to meet your daily operational requirements and demand.
Why Freight Broker Companies Need Invoice Factoring Services
The issue arises when you don’t have a steady cash flow to power your fledgling business. This is where business invoice factoring financing services come into play.
If you want to avoid cash flow problems and facilitate getting paid by shippers faster, it would be best to collaborate with the best invoice factoring financing company you can find. But if you’re still a little hesitant about using small business factoring services, the following are reasons why you should think otherwise:
Easy Application and Approval Process
Working with money factoring companies that offer the best invoice funding services will be your best bet. Comparing it with other forms of funding and financing services, it’s still the easiest method you can opt for. Since there aren’t a lot of variables to take into account, the processing time for the entire application and approval is much faster.
The process will be even much faster if the corresponding shipper has a good credit score. Since business factoring companies place extreme value on your client’s credit rating, it would help a lot for your shipper customer to have an excellent credit score on record and must be free from liens or judgments.
It would be more crucial for you to get into such a program if you’ve just recently started your company. Plus, you should always work with reputable shippers because while your good record is important, it only gets you halfway across the board. Remember that in order to get approved by freight factoring companies, you need invoices that are from credible shipping firms.
Eliminates Risks From Working With Delinquent Clients
Reputable invoice funding companies can offer freight broker companies non-recourse factoring services. This can help eliminate the risks associated with shippers who often fail to meet payment deadlines.
If you don’t know the distinction between the two, recourse factoring usually has lower fees. However, you will be held liable in case your shipper client fails to pay the invoice. When the shipper is unable to pay the outstanding invoice, you’ll be forced to buy them back from the factoring company.
On the other hand, non-recourse factoring removes the risk from your hands. Even if your shipper fails to pay the invoice, you have nothing to worry about since you’re no longer obligated after they have purchased the corresponding invoice. But the thing is, you will be paying more upfront to compensate the factoring company for the risk that they will assume on your behalf.
Ensures Consistent Cash Flow
Invoice factoring is a financial strategy that can help you convert your outstanding invoices that are due within 90 days into immediate cash for your small freight business right away. In short, invoice funding companies buy these invoices from you so you can get paid faster.
This immediate funding method can significantly improve your daily cash flow since you won’t have to wait several weeks or months for your shippers to pay their invoices. This, you can have a steady income that can enable you to address the daily expenses involved in running your business smoothly without you going into debt.
Boost Your Business With Factoring
Factoring is necessary not just to increase your freight company’s income but also to boost its growth. Don’t get weighed down by a slow stream of income and insufficient cash flow caused by lengthy invoice payment cycles. It’s time for you to join the other freight broker companies in the country that have already gotten a head start by using invoice funding to enhance their businesses.