The Strong Benefits of Freight Factoring

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Factoring – not just a form of financing the supply and range of services. This distinguishes it from the more traditional nature of international trade instruments (letters of credit, guarantees, etc.). The participants of the transaction are: Supplier – seller of goods (works, services), is interested in obtaining as quickly as possible for their payment. The buyer, purchased goods (works, services), which is advantageous to pay for delivery to the greatest possible postponement. Factor – A bank or factoring company. Paid by the Supplier of the accounts receivable.
Stable funding is a prerequisite for successful business development. To stabilize the financial flows, minimizing risks and timely payment of the needs of enterprises can use a form of short-term financing as factoring.In an ideal world in freight factoring is not necessary. Companies – carriers will receive orders, deliver the goods, calculated with clients and in a short time to get paid. Once a business owner will receive proper care, he or she will pay the costs – maintenance of trucks, cost drivers, the price of fuel and the payment of suppliers. And also may be paid for additional costs such as for example a permit for oversize and overweight.Unfortunately, the majority of small and medium-sized transport companies in North America does not work that way. Some delay with payment of transport companies services – for decades or more taken that way to deal with the carrier, that is a month after the services are provided – the smaller the period of payment. In addition, there are drivers, staff and suppliers, whose services must be paid to the joint business was, and customer trucks to use the road.Therefore, freight factoring is that is needed. You should perform the following steps:

1. The customer orders shipping and precise details of the actual cargo, the delivery date and type of service.

2. The auto company takes the order and delivers the goods.

3. The auto company sends an invoice factoring company, and not the client.

4. Freight factoring companies pays a percentage of each bill of lading and invoice the client5. Once the customer has paid in full, the remaining amount (net of factoring commissions) paid to the motor companies.Overall, this is a simple and intuitive process – invoice paid almost immediately, it ensures the absence of administrative routine in the relationship with the customer. It also means that do not have to wait for weeks and months on end to get your money. The use of factoring as a financial instrument in modern conditions helps expanding export operations.

5. Once the customer has paid in full, the remaining amount (net of factoring commissions) paid to the motor companies.Overall, this is a simple and intuitive process – invoice paid almost immediately, it ensures the absence of administrative routine in the relationship with the customer. It also means that do not have to wait for weeks and months on end to get your money. The use of factoring as a financial instrument in modern conditions helps expanding export operations.
-Gives the company to attract new customers and offer them preferential terms-Shopping goods and services is an important element in the business insurance strength mutual responsibility of the parties is a promising tool for small and medium businesses that lack the resources. Freight factoring – is not the best and a speedy option, but if you want to ensure the company’s cash flow is constant, then it is something that is worth considering. Factoring commission will vary and can range from 1.5% to 6% of the bill. The service – a very profitable thing should also consider the time that is saved by the fact that we should not constantly talk on the phone with clients about unpaid invoices (or stand in line at the bank, in order to set the loan). In addition, it is possible to make an accurate calculation of wages of drivers.

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