Factoring Financing Articles

Looking for a business loan but can’t find one? Or worse, has your loan request been rejected? One of the toughest jobs for business owners is trying to secure business financing. Unfortunately, getting a business loan isn’t always easy. Although most banks want to lend money, they have strict underwriting criteria that they must follow. This commonly includes asking for your company’s financial history and looking for assets. However – not all small businesses have long track records or tangible assets. Does this mean that you can get business financing? No – it just means that business loans may not be the best alternative for your company.

Does your company give its clients 30 to 45 days to pay invoices? Most companies that offer payment terms usually run into cash flow problems. This is because few businesses have the required cash cushion to wait 45 days to get paid. That forces owners to either juggle vendor payments – or worse – turn away opportunities. There is a solution for this problem. It’s called invoice factoring.

Suppose that instead of waiting 45 days to get paid, you were able to get 80% immediately and the remaining 20% in after 45 days. Would that work better for you? Of course it would. And you can achieve this by factoring your invoices. The biggest advantage of factoring is that you get an immediate advance on your invoices. This gives you funds you need to pay suppliers and employees. It also enables you to take advantage of new sales opportunities without having to worry about juggling vendor payments.

An accounts receivable factoring transaction works as follows. Once you deliver your product (or service) you invoice your client. At that point you also finance the invoice through the factoring company. The factoring company advances you 80% immediately. You get the remaining 20%, less a small factoring fee, once your client pays the invoice in full.

One advantage of working with factoring companies is that they look at businesses in a different way than banks do. They consider your invoices from solid paying clients to be your biggest asset. And as such, they are willing to advance money against them. Of course, factoring companies also look at other criteria. But the main criteria are to have good invoices.

Factoring can be used in many industries and has a number of sub-specialties. Freight bill factoring is a form of factoring that is common in the transportation industry. Construction factoring and medical factoring are used in the construction and medical industries respectively. Factoring financing is a flexible solution that can be used across many industries and can help position your company for growth.

Wondering whether you’ll be able to get a loan for your business? Getting a business loan is one of the toughest tasks to accomplish for a company owner. Although banks represent a very cost effective source of funds, they are very selective about the customers they take. This is especially true nowadays were commercial credit at banks is very tight. Most banks will only provide business loans to companies that have a solid track record and substantial assets. But, what if your company does not meet the banks criteria? What is you are a startup or if your company does not have traditional assets such as real estate? One business financing alternative that has been recently gaining traction could be the right solution for you. It’s called accounts receivable financing.

Accounts receivable financing, commonly called factoring, is a type of financing that helps companies that need to wait 30 to 60 days to get their invoices paid. It provides funds to pay employees and suppliers while you wait to get paid by your commercial clients. Accounts receivable factoring is different than a business loan because the factoring company does not lend you money. Rather, the factoring company advances you money based on your open invoices and gets paid once your customer pays.

A typical transaction would work as follows. Once you deliver your product and send the invoice to the client, you submit a copy of the invoice for financing. Within one to two business days, the factoring company advances you about 80% of the invoice. Once your client submits the payment in full for the invoice, you get the remaining 20% less a small fee charged for the service. Costs are usually determined based on the size of the financing line and can go from 2% to 5% for 30 days depending on the specific details of the transaction.

One of the major benefits of receivables factoring is the flexibility that it provides. Your maximum financing line is determined by the invoices you submit and is tied directly to your monthly sales. This means that your financing line increases dynamically, as your business grows. This provides the liquidity you need to stay current on your obligations and enables you to maximize sales opportunities.
Another benefit of factoring invoices is that it’s relatively easy to obtain. The biggest requirement is that you do business with reliable companies (or government agencies) that pay in 30 to 60 days. This is critical because your invoice is the collateral, for lack of a better term, that the factoring company is financing. Aside from that, your business needs to be properly organized and well managed.

Invoice factoring has been around for quite a while and has been gaining traction in recent times as a flexible solution to finance business growth. Due to its structure it’s the ideal source of financing for startup and growing companies alike.

Do your clients take 30, 60 or even 90 days to pay their invoices? Extending payment terms, as it is commonly known, is very common in the business world. Customers demand that they be given credit, in the meantime you still have to pay for your company’s ongoing expenses.

This can be a problem for companies of all sizes – from large established concerns to small startups. Unless you have enough cash to pay for business expenses – rent, salaries and suppliers – while you wait to get paid – your company is bound to run into problems. You may have to avoid taking large orders to conserve cash. Or worse, you may have to delay payments to employees or key suppliers.

Is the solution to get a business loan from the bank? Hardly. Banks only lend to companies that can provide detailed financials and show profitable operations for many years. If you get a loan, it will be for a fixed amount. If you need additional funds, you’ll need to go through the process one more time. And worse, getting a business loan takes a very long time.

A better solution is accounts receivable factoring. Receivables factoring eliminates having to wait for customers to pay you – and provides you with the funds you need to meet business expenses. Furthermore, it’s easier and quicker to obtain than a bank loan.

How does receivables factoring work? Simple. The factoring company gives you an advance on your accounts receivable. The advance ranges from 70% to 90% depending on industry and the types of clients you work with. This advance allows you to meet ongoing business expenses without having to wait for your clients to pay. The transaction is settled as soon as your client pays the open invoice.

Factoring receivables is also a cost effective solution. Factoring rates are usually determined based on the amount of financing you receive and on the payment reliability of your customers. The cost will be anywhere between 1.5% to 3.5% per month based on these criteria.

As opposed to other financing tools, factoring invoices is convenient and easy to obtain. Furthermore, it is usually more flexible than other financing tools since your financing line is based exclusively on your sales. That means, that your financing grows with your sales, making factoring a true tool for growth.

As a trucking company owner, you know that the transportation industry is very profitable. And, it’s safe to say that the industry will grow steadily for the years to come. If only because people are buying more things and someone needs to haul the stuff around. There has never been a better time to own a trucking company.

There are three keys to growing your trucking company successfully.

First, find truck loads of cargo and freight

The key to winning in the trucking game is to find clients with truck loads of freight that need to be hauled. There are a few ways to do this. Many owners rely on the internet and go to freight boards or load boards to try and get loads. This is a good strategy because there are a number of reputable boards that can certainly keep your business humming for a long time. Another advantage of truck boards is that they help you reduce your infamous deadhead trips – trips where you are returning home without hauling anything.

Second, work with reputable clients and freight brokers

Although load boards are great, you also want to work with established freight brokers reputable freight broker will help you get loads so that your trucks are always running. They will also help with the proper paperwork and documentation, and lastly, they will ensure that you get paid.

However, not all freight brokers or clients are created equal. Be sure to check them out before doing business with them. You can do this by asking them for references or by checking their commercial credit.

Lastly, get the right financing

Waiting up to 60 days to get paid for your freight bills can put your trucking business in neutral very quickly. Your best option is to finance your freight bills using factoring. Freight bill factoring provides you with money for your slow paying freight bills, giving you the funds to pay for fuel, drivers and repairs.

Putting it all together

Making it big with a trucking company is not hard – you just have to be smart. Be sure to get the right clients and the proper financing, and watch your business grow.

Trucking company owners know that cash is king and prompt paying clients are critical to the company’s success. But, what can you do if you get a good client that insists on paying their invoice in 30 days or more? How do you pay fuel, drivers and repairs while you wait to get paid?

In the past, the only option you had was to take the client and grit your teeth.

However, there is an option that has been gaining popularity with the trucking community. It’s called freight bill factoring. Freight factoring eliminates the payment wait and gets your freight bills paid in a couple of days. But, transportation factoring is very different than a business loan. It works by selling your freight bills to a freight factoring company, who pays you for them and then waits to get paid by your customers/freight brokers.

Transportation factoring can be easy to use and works as follows:

1. You deliver the load and issue a freight bill
2. You sell the freight bill to the factoring company, who pays you a first installment of 90% to 97% of the freight bill
3. You get immediate money while the factoring company waits
4. Once the factoring company gets paid, any remaining reserves (less a small fee) are returned as your second installment

Freight factoring rates vary, but they go from 1.5% to 3% per 30 days depending on volume, duration of transactions and customer selection. A factoring line can be established in a little as 3 days, provided you have all your company documentation in order.

As a trucking company owner you are very aware that transportation companies are quite demanding when it comes to cash flow. They need regular cash to be able to meet all the ongoing expenses. As long as cash is coming in at a nice rate, your trucking company operates like a well-oiled machine. But if there is a hiccup in the cash flow, the well oiled machine starts creaking. And if there is a major cash flow problem, gears start flying all over the place and the so-called well oiled machine comes to a grinding stop.

What is the biggest source of cash flow problems for small and mid sized trucking companies? Slow paying clients. Clients that take up to 60 days to pay their freight bills. Although large trucking companies can certainly handle waiting – small trucking companies with few power units usually cannot afford the wait. As an owner, you need the money and you need it now.

Is the solution to turn away slow paying clients? Absolutely not. That would be business suicide. The solution is to eliminate the wait by financing your freight bills using freight bill factoring.

The concept behind factoring is very simple. Factoring companies provide you with cash for your freight bills. Usually in 24 hours or less. You get immediate funding while the factoring company waits to get paid. With factoring, you get immediate money for your slow paying freight bills, which allows you to pay drivers, maintain power units and buy fuel.

Factoring is very easy to qualify for and very common in the trucking industry. Most trucking companies can easily qualify since the main requirement is that they do business with good (although slow) paying clients. It allows you to easily do business with clients that pay in 30 to 90 days and eliminates the stress of having to wait to get paid.

How does freight factoring work? It’s simple:

1. You deliver the load and submit copies of the documents to the factoring company
2. The factoring company advances you about 90% of the freight bill in 24 hours (the remaining 10% is used to cover billing disputes). You get money almost immediately
3. Once the factoring company is paid by the client, the remaining 10% (less a small fee) is rebated to you

As you can see, factoring eliminates the wait to get paid and gives you the cash you need to run your trucking company.

Running a successful trucking company requires three things.

1. Finding truck loads of freight
2. Moving the truck load from point A to point B
3. Managing all the little details so that 1 and 2 happen successfully

Sounds easy, doesn’t it? However, most trucking companies fail because of the little details that go wrong. Repairs are missed, so trucks stop working. Drivers are not paid on time, so the drivers quit. Fuel is not paid for, so the trucks stop moving freight. Although the problems may look entirely unrelated, they are connected. They all indicate that there are cash flow problems. What is worse, your company may be doing great and invoicing a lot, and still have cash flow problems. That is why most owners don’t find out about the problems until it is too late.

Trucking companies need money to keep running. Actually, they need more money than traditional companies. Money to pay drivers. To pay for fuel and repairs. To run their business. In the transportation industry, you surely need to spend money to make money. Otherwise, try hauling a load in a truck that does not have fuel….or a paid driver.

The biggest cash flow challenge that trucking company owners have is waiting up to 60 days to get paid for their freight bills. Slow paying clients can limit your cash flow and potentially drive you out of business.

Fortunately, trucking companies have a great financing option that is easy to qualify for. It is called freight bill factoring. Freight bill factoring provides you with immediate money for your freight bills and eliminates having to wait to get paid by your clients. It provides you with the necessary funds to repair your trucks, pay your drivers and keep up with fuel expenses.

Freight bill factoring is really easy to do and set up. And more importantly, once you set it up, it can provide you with ongoing continuous funding. This enables you to turn invoices into cash almost immediately, and use the money to grow your company.

Growing your trucking company does not have to be a financial challenge. Factoring freight bills can help you finance your way to success.

The Canadian trucking industry has been in a period of growth. In recent years, many entrepreneurs have launched small and midsize trucking companies and have gone to the roads, trying to build a better future.

Many company owners succeed. Others fail. What is the difference between them? Being able to find high paying loads? Lack of opportunity? Probably not. I think that the biggest reason many trucking companies fail is plain and simple: lack of proper financing.

But, if you are a small or mid sized company owner, where can you get the money to finance your business? From the bank? Not likely. First, a business loan is not always the right type of financing for a trucking company. Second, business loans are just hard to obtain and very inflexible. Let’s look at the situation from an owner’s perspective.

The biggest challenge that trucking companies have is slow paying customers. Customers that want to pay their freight bills in 30 to 60 days. If you consider that most of your expenses need immediate payment and can’t wait, you can see why the numbers simply don’t work.

What you need is a financing program that finances your sales and eliminates the 60 day wait, providing you with funding as soon as you invoice your customer. The solution to this problem is to factor your freight bills. But your local bank does not offer freight bill factoring. Freight factoring is offered by a factoring company.

Freight bill factoring accelerates payment for your freight bills and provides you the money you need to pay fuel, expenses and drivers. It gives you the cash flow you need to take on new loads, hire drivers and grow your business. It’s simple to use and works as follows:

1. You deliver the loads and invoice your clients
2. You send a copy of the freight bill to the factoring company
3. The factoring company advances you up to 97% of your invoice
4. You get the money to grow your business, The factoring company waits to be paid
5. Once the client pays, the transaction is settled. Any held reserves are rebated back

As you can see, freight bill factoring enables you to get the money you need, when you need it. It streamlines your cash flow and helps you run and grow your trucking company more efficiently.

Owing a trucking company or logistics company (freight brokerage) can be very profitable. At the same time, transportation companies tend to be cash hungry. There are fuel expenses, employee expenses, operator expenses, repair expenses and many other expenses that need to be paid quickly. However, most customers don’t offer quick-pays and usually pay their freight bills in 30 to 60 days.

This creates a major challenge. Why? You have expenses that need to be paid quickly and customers that want to pay slowly. Unless your company has some available funds, you will most likely run into problems.

Many company owners try to address this cash gap by trying to get business financing from their bank. However, they soon learn that banks seldom provide business loans to small transportation companies. Unfortunately, a business loan is not an option for most logistics and transportation companies. So, what is?

In many cases, trucking companies have an option that is better that a small business loan. It is called invoice factoring. Factoring can provide logistics companies with the financing they need to meet their current expenses and grow. And, as opposed to bank financing, factoring is easy to obtain and can be setup in about a week.

So what is factoring? Factoring provides companies with an advance on your slow paying freight bills. This enables them to meet expenses while waiting to get paid by customers. It works as follows:

1. You company delivers the load and invoices the customer
2. The factoring company provides you and advance of up to 90% of your freight bill
3. You can use the advance to meet all expenses
4. Once your customer pays, you’ll get the remaining 10% less a small factoring fee

The cost of factoring can be anywhere between 1.5% to 3% per month. The cost is determined by your industry, the quality of your customers (who pay the freight bills) and the amount of financing you require. Freight bill factoring is a great solution for logistics and trucking companies and can help grow your company to the next level.

Working capital is the lifeblood of a transportation company. Whether you own a carrier or a brokerage, you constantly need to juggle fuel payments, repairs and driver salaries. What makes the business challenging is that most customers pay for their freight bills in 30, 50 or even 60 days. Slow customer payments put a strain on your cash flow. This makes running the business very hard and sometimes makes growth impossible.

One obvious solution to this challenge is to look for business financing. Ideally a business loan can be used to strengthen your bank account and help cover any gaps in your cash flow. However, qualifying for business loans can be challenging as there are many requirements that you’ll need to meet. This includes having audited financials, two to three years of profitable business experience and meeting the financial institutions collateral requirements.

There is another alternative though. Suppose that you could get an advance on your clients slow-paying invoices. So instead of waiting – you would get paid a substantial amount. If you consider this for a moment, you would realize that most of your working capital problems would go away. You would have enough funds to pay for fuel, drivers and repairs. And there is one way to achieve this – it’s by factoring your freight bills.

Factoring provides an advance on your slow paying invoices. The advance is usually about 90% of the invoice, with 10% held in reserve. The 10% reserve is returned to you, less a small service fee, once the invoice is fully paid for.

Invoice factoring has a number of advantages. For starters, it’s easy to qualify for. The biggest requirement is that you do business with credit worthy clients. Aside from that, you must own a well run business with good prospects for growth.

Another advantage of accounts receivable factoring is that you funding line is tied to your sales. This makes invoice factoring a dynamic financing product, were your line increases as your sales increase. This is an ideal solution for transportation companies with solid growth plans.

Is your trucking company or freight brokerage stuck in neutral? One of the biggest challenges that you will face as a transportation company owner is dealing with clients that don’t offer quick pays, and instead, pay freight bills in 30 to 60 days. This can be very challenging for new and growing companies since you have expenses that need to be paid now, such as suppliers, repairs, rent and drivers.

One alternative is to try to negotiate quick payments from your clients. However you may soon find that your pleas will meet deaf ears – clients pay in 30 days because they have to. That is how they manage their own cash flow. Another alternative is to go to a bank for business financing. However, getting a business loan can be challenging. Banks will not offer small business loans to companies that don’t have, at a minimum, 2 years of profitable operations and a solid balance sheet.

There is an alternative, however. And often, it is better than a conventional business loan. It’s the ultimate quick pay tool and it does not require that your customer pay any sooner than they do now. This solution is called freight factoring.

Factoring financing provides you with an advance of 90% (sometimes even more) on your freight bills, as soon as the load is delivered. This gives you the necessary working capital to pay business expenses – drivers, rent, fuel and repairs. The remaining 10%, less a small fee, is advanced once the freight bill is actually paid by your customer.

Factoring freight bills offers a number of advantages over conventional business loans. It is easy to get and can be set up quickly, usually in a matter of days. But unlike a line of credit which usually has limits, invoice factoring has none. It is tied directly to your sales and your growth. In other words, your financing line is directly based on your ability to grow your trucking company or freight brokerage.

Few banks offer factoring financing so you’ll have to go to a factoring company if you want to get this type of financing. Fortunately, it’s becoming quite popular and there are a number of factoring companies that offer competitive products.

And how much does factoring cost? It’s surprisingly competitive. Monthly rates vary and will be based on the credit quality of your customers and the amount of financing you need. Generally, rates go from 1.5% per month for a high volume account to 3.5% for a smaller account. So, if you have a transportation company that is on the grow, be sure to consider transportation factoring financing.

Running a transportation company, a carrier or broker, has always been a financially rewarding career. When run properly and professionally, they can grow beyond your expectations. At the same time, they present financial challenges as well. Transportation is a cash intensive business with many expenses that can’t wait. There are drivers, fuel and repairs that must be paid for. However, clients can take a long as 60 days to pay their freight bills.

Waiting up to 60 days to get paid can be very taxing, especially for new or rapidly growing companies. Few have the required cash reserves to cope with the increasing expenses of growing a venture. One traditional alternative is to look for a business loan. However, business loans are not always suited to handle operational expenses. They are better suited for buying assets, such as trucks. There is a form of business financing that is ideal for funding operational expenses. It’s called factoring and it’s offered by factoring companies.

Factoring freight bills provides carriers and logistics companies with immediate liquidity and enables them to meet business expenses on time. It eliminates the juggling act of managing client payments and business expenses, greatly streamlining business operations. Basically, when used properly, freight bill factoring provides an effective platform for growth.

Freight factoring, as it is commonly known, integrates very well into transportation companies. It works by providing an advance of up to 90% on your invoices. The advance is provided immediately upon invoicing. You get the balance (the remaining 10%), less the financing fee, once your clients pays for the invoice in full.

By using freight bill factoring, you are doing the equivalent of putting your business on a Cash on Delivery (COD) basis. This simplifies operations as you limit (or even eliminate) worries about collections and payment tracking.

There are two important requirements needed to qualify for invoice factoring. First, your company must do business with good clients. This means that they must be reputable companies that pay their invoices in 30 to 60 days. Second, your company must be free of liens and legal issues. What makes factoring freight bills different than conventional loans is that startups can successfully obtain financing provided they have a roster of solid customers.

Factoring does not work in every situation though. It works best if your main challenge is that you can’t wait 30 to 60 days to get paid by clients.

Owing a freight brokerage business can be very rewarding and profitable. But as a freight broker, you know that your business is very cash intensive. Your drivers depend on you to be paid on time. However, clients can take up to 60 days to pay for their loads.

So you end up caught in the middle. Caught between drivers that need cash now and clients that want to pay slowly. The math does not work. And unless you have a nice cash cushion in the bank, something has to give.

Trying to get a business loan won’t help. Banks only give business loans to companies that have a great history and solid track record. But what if your track record isn’t great or if you are a startup? What if you have no history but have a great future potential? If that is your situation, your financing will need to come from another source- a factoring company.

Factoring companies are experts at financing businesses with little past history but great future prospects. Basically, the factor eliminates the 30 to 60 days it takes to get your freight bills paid. With factoring, you get your freight bills paid in about 2 days. That gives you the cash you need to pay drivers and meet other business expenses.

Factoring is flexible and grows with your company. As opposed to having arbitrary limits like business loans or lines of credit, factoring limits are driven by your sales. The more you sell, the more financing you qualify for.

Here is how factoring works:

1. You submit a copy of your freight bills to the factoring company
2. The factor advances you between 90% to 98% of your freight bills (sometimes they hold a small reserve)
3. Your get immediate use of the funds. The factor waits to get paid.
4. If the factor held a reserve, the reserve is rebated as soon as your customer pays the freight bill

Factoring costs are driven by three variables:

a) monthly financed volume,
b) your customer credit worthiness and,
c) how long the freight bill goes unpaid.

As a rule of thumb, rates go between 1.6% to 3% per month, depending on these variables.

Factoring freight brokers is a specialty type of factoring and not all factoring companies offer it. However, those that do will help you succeed beyond your expectations.

Running a freight brokerage can be very profitable. Although being a freight broker can be very rewarding, financially speaking, it can also be very challenging. Especially since drivers depend on you to pay them quickly. And many times, your clients make you wait 30 to 60 days before they pay you.

So you have a challenge. Your drivers want to get paid quickly but your clients want to pay slowly. The math doesn’t work. Unless you have a nice cash cushion in the bank, paying your drivers will be a problem. And trying to get bank financing will get you nowhere. Banks always provide financing based on your past history. What if you are a new or expanding freight broker?

A better solution is to finance your freight bills through freight broker factoring. Freight factoring provides you with immediate money for your freight bills, giving you the necessary funds to pay your business expenses and most importantly – your drivers. And, as opposed to bank loans, freight factoring is easy to obtain. While banks usually look at your past history to make their credit decisions, factoring companies look at your future potential. The main qualification requirement is that you do business with credit worthy clients that pay on time.

If you are a freight broker, factoring your freight bills may be a little bit different from traditional factoring. Most factors will team up with you to find a solution to pay your drivers on time, since this is essential. Others may even pay your drivers on your behalf, helping you handle back office tasks.

Freight broker factoring works as follows:

1. Once the freight has been delivered, you send copies of the documents to the factor
2. The factor advances you up to 100% (less fee) of the freight bill
3. You get immediate use of funds, while the factor waits to get paid
4. Once the client has paid, the transaction is settled

One of the big advantages of factoring is that it is easier to get than a business loan. And, as opposed to business loans, factoring financing grows with your business. The more you invoice, the more financing you qualify for.

If you own a trucking company, you know that it can be a very profitable business. However, you also know that trucking companies are very cash hungry. You need money to pay for the equipment, to pay your drivers and for fuel. The challenge comes from the fact that freight bills can take up to 60 days to get paid. Unless you have a lot of cash in the bank, this can be a problem.

Speaking of banks, going to your banker for a business loan or line of credit will not help much either. Bankers will only lend money to companies that have a lot of assets, have been in business for three years and can provide audited financial statements. Of course, if you had lots of assets you wouldn’t need a banker.

So, what are your options?

Freight bill factoring, also known as freight factoring, can provide you with immediate financing for your slow paying freight bills. So, if you have quite a few invoices that are paying slowly, factoring can help you.

The factoring arrangement is very simple. The factoring company advances a large portion of the money owed for your freight bills the moment you invoice your customer. They wait to get paid while you get immediate use of the money.

As opposed to bank financing, freight bill factoring is easy to qualify for and available to small and large trucking companies alike. Most factoring companies have two main requirements. The first one is that you work with reliable clients and freight brokers. The second one is that your firm has at least two trucks. It’s easier than a bank, isn’t it?

If you own a trucking company that is growing, be sure to consider freight factoring.

Managing cash flow is one of the biggest challenges that transportation company owners have today. This applies both to carriers and freight brokers who must balance slow paying clients and suppliers that demand quick payments. It is not uncommon to have clients that pay in 30 to 45 days and drivers and suppliers who want to be paid quickly.

This is particularly challenging for new and growing companies who may not have strong cash positions. Traditionally, business owners deal with this problem by asking clients for quick payments. Sadly, this strategy seldom works as clients, who usually have the upper hand, will insist in paying in 45 days. An alternative that many consider is obtaining business financing through their local institution. However, most will not qualify for a business loans as banks usually have strict lending criteria. So, if a business loan is not an option – what is?

Fortunately there is a solution and it involves factoring your freight bills. This type of financing provides you with the cash flow you need to pay your business expenses and grow your company. Freight bill factoring provides you with a 90% advance (or higher) on your freight bills. Once your client pays the freight bill, you get the remaining 10%, less a small fee.

Invoice factoring has a number of advantages over conventional financing. First, it’s very easy to obtain. The biggest requirement is that you do business with reputable and credit worthy clients. Second, it can be setup quickly, usually in a matter of days. But more importantly, freight factoring is flexible and tied to your sales. This means that your financing levels increase as your sales increase.

Invoice factoring is also cost effective. Costs vary based on a number of parameters, but they range between 1.5% and 2.5% per month. When used properly it can help your company grow dramatically and serve as a crucial stepping stone to eventually obtaining bank financing.

Growth in the trucking industry is all about freight volume. The more freight you move, the faster your company will grow. But big volume comes with a catch – slow paying customers. Unfortunately, waiting 30 to 45 days to get paid is very common in the industry.

But what if you cannot afford to wait 45 days to get paid by your clients? What if you need to buy fuel, pay drivers or pay for repairs? Employees and suppliers seldom like to wait to get paid.

Needless to say, going to the bank for financing is not an option. They usually do not like to finance small and mid sized businesses. Unless, of course, you have tons of assets, three years worth of financial statements and you have great credit.

So, now what? What are your options?

If you own a trucking company, there is a solution that will provide you with plenty of financing. And as opposed to bank loans, this financing is tied to your freight bills. The more you invoice, the more financing you qualify for.

This solution can provide you with the necessary funds to buy fuel, pay drivers and pay for repairs. And it is available to freight companies of any size. The solution is called freight bill factoring (or freight factoring for short).

Freight bill factoring works as follows:

1. You deliver the freight and invoice your customer
2. You send a copy of the freight bill to the factoring company
3. The factoring company advances you up to 90% of your invoice (10% held in reserve)
4. Once the factoring company gets paid, they rebate you the remaining 10% less their fees

As opposed to bank loans, factoring has no arbitrary high limits. You can factor as many freight bills as you can generate. So, as your company grows, so does your financing.

Factoring is a great tool to finance growing trucking companies that need money to grow. It allows you to take on new opportunities to drive your company to the next level.

Do you feel that your trucking company is heading straight for a cliff? Do you feel that your trucking company is stuck in neutral? Or worse, do you have lots of slow paying freight bills and not a lot of cash in your business bank account?

Having slow paying clients is one of the worst problems that you can have. Especially when you own a cash hungry trucking company that needs money to pay for drivers, repairs, fuel and equipment. The biggest cash flow issue comes from your slow paying customers that can take up to 60 days to pay your freight bills.

If you are like most owners, your first reaction is to try and get a loan. However, a loan will only cure the temporary problem. What will happen in four months when the loan money has run out? You will be left exactly where you are standing now. Back to square one.

A better solution would be to eliminate the slow payments all together. Note that I did not say that we should eliminate the slow paying clients…..just the payments. What do you think you could do if all your freight bills were paid in two days instead of 30 or 60?

There is a solution that can help you accomplish that. Is called freight bill factoring and is one of the best financing tools for transportation companies. It eliminates the guesswork of having slow paying clients. Freight factoring provides you with immediate funding from the moment that you generate invoices from approved clients.

Invoice Factoring provides you with the necessary funding to meet your expenses. But more importantly, it provides you with the necessary funding to capture new opportunities and new contracts so that you can haul more loads and grow your company. With factoring, you no longer need to turn away opportunities just because they may be slow payers.

Qualifying for factoring is usually easy. The main requirement is to have freight bills from good credit worthy clients. Things such as financial statements or personal credit reports are seldom required, making the application process fast, easy and very user friendly.

Factoring is a cost effective solution that can help you drive your freight company to the next level.

The trucking industry is growing by leaps and bounds. It is a well-known fact that the industry will grow consistently for the next decade. Basically, trucking companies are delivering truck loads of freight every day and are growing quickly and profitably. They are an engine that is driving the economy.

This is all good news for trucking companies, at least for those that can deal with the challenges of paying for repairs, fuel and meeting payroll on time. This can be challenging for a new and growing company, since most clients pay their freight bills in up to 60 days. Waiting can kill the business.

Of course, going to the bank for money won’t help. Banks only finance businesses that have good cash flow, lots of assets and can provide three years worth of financial statements. Of course, if you could meet those requirements you would not need business financing.

A better option is to factor your freight bills. Freight factoring can provide you with money to pay for repairs, fuel and drivers. And as opposed to bank financing, factoring is easy to qualify for and simple to use.

Here is a sample transaction:

1. You sell your freight bill to the factoring company
2. The factoring company advances you up to 95% of the bill (90% is more common. Sometimes a small reserve is held)
3. Once the freight bill is paid, the fee is charged and any reserves are rebated

The main requirement of factoring is that you do business with credit worthy clients that pay their invoices consistently. The service can generally be set up in a few days, and once it’s set up, the financing is continuous.

As an added service, factoring companies will also check the creditworthiness of your new prospects, enabling you to only do business with clients that will pay their invoices on time.

Many trucking company owners have used freight bill factoring to grow their transportation companies, enabling them to take on new loads, and add equipment while easily keeping up with expenses. Factoring can help you drive your trucking company to financial success.

Do you have clients that pay your invoices in 30, 45 or even 60 days? If so, then you are aware of how their slow can drain your working capital. Unless your company has a nice cash cushion in the bank, paying suppliers or even employees can become a problem.

Asking your customers to pay your invoices quickly will not help either. Paying invoices in 30 to 60 days is an industry standard. And, if you work with large or midsize companies, you’ll be expected to offer 30 days terms if you want to keep their business. There is no alternative.

So what can a business owner do? Going to the bank may help some, but not most. Before providing financing, banks will require that you provide them with three years of audited financials. They may also require that you have stellar personal credit. So if you cannot get a business loan, what other business financing options do you have?

Invoice financing, commonly known as factoring, is a option that is widely used by businesses, however it is virtually unknown to the general public. It gets your invoices paid in as little as 2 days, eliminating long payment periods. In the end, it provides you with predictable cash flow, enabling you to pay suppliers, employees and grow your business.

An invoice factoring transaction works as follows:

1. You deliver goods or services and invoice for them
2. You send a copy of the invoice to the factoring company, who advances you up to 85% as a first installment
3. You get the funds to meet business expenses
4. Once your customer pays for the invoice, the transaction is settled

The cost of factoring invoices, varies based on the commercial quality of your customers and the length of time that you need the money for. Generally speaking, the monthly cost will be between 1.5% and 3.5% for most accounts.

The big benefit of invoice factoring is that it is easy to obtain and can be set up quickly. On average, it takes about 5 days to obtain factoring financing. And once you get it, qualifying for line increases is very easy. All you need to do is increase your sales. Factoring is one of the few products that grows with your business.

One of the biggest reasons why small companies can’t get business financing is that they lack the collateral that most financial institutions demand. Even companies in the gas and oil industry, a notoriously good industry, face this challenge. This puts business owners in a very tricky position because they need the financing to grow – but they can’t obtain it. Most business owners think that a business loan (or line of credit) is the only financial solution that will help their companies. This is incorrect. There are a number of alternative products that can be better than business loans for certain situations.

One of these products is factoring, commonly known as invoice factoring. Factoring financing helps companies that sell to other businesses on net 30 terms. In other words, it helps companies that cannot wait 30 (or 60 days) to get paid for their invoices. It provides an immediate source of capital that enables you to cover your company expenses and puts your company in a stronger position to pursue new sales opportunities.

Accounts receivable factoring offers a simple proposition. It provides an advance, usually 80% to 90% depending on the industry, for invoices that are going to be paid in up to 90 days. The remaining 10% to 20% is advanced, less a small fee, once the invoice is actually paid.

Factoring companies consider your invoices from credit worthy clients to be great collateral, which is why they are able to advance funds for them. Qualifying for the services of a factoring company is fairly easy; you need to have good clients and must be free of legal or tax problems.

Another common financing problem that wholesalers/resellers have is getting a purchase order that exceeds their current capital. Most resellers area forced to turn away such orders because they do not have sufficient money to pay their suppliers. This is easily solved with purchase order financing.
Purchase order funding covers your supplier expenses associated with a specific purchase order. It enables you to complete and book large orders – positioning your business in a very strong position for growth.

Although factoring and purchase order financing are not very well known yet, they have been gaining traction in the past few years as a flexible solution for growing companies.

Do you have customer in the Oil and Gas sector? Working with clients in the Oil and Gas industry can be very profitable. However, these clients also tend to pay invoices in 30 to 60 days, which can drain your company’s working capital. Many times, these great but slow paying customers can drag your company’s performance down.

If your working capital is tied in slow paying customers, eventually you’ll have to start turning away new sales. Even worse, you may miss payroll or key supplier payments. Before long your company will be stuck in neutral or about to enter a death spiral. The solution, of course, is to obtain some working capital.

Going to the bank for business financing (e.g. a working capital business loan) is tricky and won’t work for most business owners. Banks usually require 3 years worth of financial statements, detailed business plans and will take months to make a decision. In the end, you may – or may not – get the capital you need. However, if your biggest challenge is that your customers take up to 60 days to pay their invoices, you should consider factoring your receivables.

Factoring receivables enables you get an advance on your slow paying invoices. This provides you with the necessary working capital to make new sales, meet payroll and pay rent. And as opposed to conventional bank financing, invoice factoring is easy to obtain and quick to set up.

Factoring financing is easy to use. It works like this:
1. You deliver your product/service to your customer
2. You submit the invoice to the factoring company for financing
3. The factoring company advances you up to 85% of the invoice as the first payment
4. Once your customer pays for the invoice, the remaining 15% is advanced, less a small service fee

Factoring services fees can range from 1.5% to 3% per month, depending on your business volume and other criteria.

There are a number of advantages to factoring invoices. For starters, it’s relatively easy to qualify for the service. The biggest requirements are that you work with reputable customers and run a good business. And it’s also easy to setup. Usually you can get financing in just a few days. All of these features make receivables factoring a great alternative for new and established companies.

Invoice factoring has been gaining popularity as a source of working capital for companies. Despite its growing popularity a multi billion dollar industry, factoring is not very well known and is not considered as a mainstream financing tool in the USA.

This site contains a number of articles about factoring and is a resource for anyone considering using factoring for your company. Please be sure to read the terms and conditions of this site. Also, please not that this site is for informational purposes only and does not give any legal or financial advice. Please consult a qualified professional if you require legal or financial advice.

Products:
Invoice Factoring
Business Loan Alternatives

Industries:
Resellers and Wholesalers
Staffing
Freight and Transportation
Oil and Gas
Medical
Construction

What is Factoring?

Invoice factoring is a business financing tool which provides working capital to companies. Most companies that engage in commercial sales need to wait 3o to 60 days to get their invoices paid. This can create cash flow problems if a company is growing, a startup or just not well capitalized. Invoice factoring provides an advance payment for slow paying invoices. This provides business owners with working capital to run and grow their businesses without having to wait for their clients to pay.

What are the Benefits of Factoring Invoices?

Factoring invoices can help businesses improve their cash flow by providing working capital to pay:

1. Suppliers
2. Employees
3. Business Expenses

However, the biggest advantage of factoring your invoices is that it eliminates the uncertainty of waiting to get paid. It provides predictable cash flow and places companies on a better financial position.

Most companies that have commercial sales will qualify for factoring, provided their clients have good credit, their invoicing practices are good and their invoices are free of liens and encumbrances.

How it Works: Quick Summary

Invoice factoring is fairly straight forward and can be used by most companies. Here is how it works:

1. You deliver your product or complete your work.
2. You send an invoice to your client
3. When you need working capital, you send the invoice to the factoring company for financing
4. The factoring company advances you about 80% of the invoice – this is your first payment
5. Once your client pays the invoice, you get the remaining 20%, minus the factoring fee

What is a Factoring Company?

A factoring company is a type of financial services company, which specializes in providing working capital to businesses.

This web site is authored by Marco Terry, who holds all copyrights.

Owning a healthcare business or practice can be very profitable and very challenging at the same time. Having to wait up to 90 days to get paid by insurance companies, HMOs and Medicare/Medicaid can wreak havoc on your company’s cash flow. This problem can easily be compounded if you have regular periodic expenses, such as rent and payroll, which must be met.

Going to the bank may be of some help, especially if you are a doctor, are willing to personally guarantee a loan and own a medical office. If you run any other type of healthcare business that bills insurance or Medicare you may be out of luck. Banks almost always require significant collateral and three years of audited financials. To make things more complicated, most bank financing has maximum limits. Much like a credit card maximum, once you reach it, that is the end of the line. But what if your business is growing?

Medical factoring allows you to finance your business by using your slow paying insurance claims as collateral. In effect it reduces the time it takes you to get paid from up to 90 days down to a few days. You can use the financing to pay rent, meet payroll and pay suppliers. You can also use it to grow your business.

As opposed to other financing tools, factoring has no arbitrary maximum limits. Your maximum amount of financing is solely determined by how much you invoice. The more you invoice, the more you can finance. Factoring enables you to grow your business and eliminates having to wait to get paid by insurance companies and by Medicare/Medicaid.

Medical factoring is easy to qualify for. It works equally well for new and for established healthcare companies. If you cannot afford to wait up to 90 days to get paid by your insurance carriers, you must consider invoice factoring as a solution.

As commercial lines of credit and business loans get harder and harder to qualify for, many medium and small medical practices and healthcare businesses are turning to medical factoring to help alleviate their slow cash flow.

Although many medical practices can still qualify for a business loan or line of credit, many are finding that traditional banking products don’t always solve their cash flow concerns in the long term. Why? Well, small business loans have to be paid within a few years and lines of credit have fixed maximum limits. Basically, neither product is very flexible and both are hard to get, unless you run a medium sized medical practice.

Medical factoring presents an interesting financing alternative. It provides you with financing that is tied to your insurance claims. If you file more claims this month than last month, your financing goes up accordingly. It provides you with predictable cash flow, ensuring that you are able to meet your office expenses. You’ll have predictable money to pay rent, meet payroll and invest in growth.

And, medical receivables factoring is ideal for small medical offices. Although most factoring companies have minimums, many will finance an office that is billing as little as $50,000 (net) per month.

Medical factoring works as follows:

1. You submit your insurance and Medicare/Medicaid claims as usual. You send a copy to the factoring company
2. The factoring company advances you 70% to 85% of your net collectibles (the non advanced part works as a reserve to cover disputes/etc.). You can use the funds as you see fit
3. Once the medical factoring company gets paid, the transaction is settled.

Setting up a factoring account can take a couple of weeks, mostly because the medical factoring company will need to perform their due diligence and audits. However, once the account is set up, the financing is continuous. You can usually get your claims funded within 24 hours of submitting them to the factoring company.

If your small medical practice has slow cash flow but good growth prospects, then invoice factoring may be the tool to help you finance your growth.

Doctors and professionals that bill insurance, HMO’s or Medicare/Medicaid know how the payment cycle of the industry works. Basically, hurry up and wait, is the call of the day. It is not uncommon for a medical professional to send a bill to an insurance company and have to wait 30, 90 or even 120 days before they get paid. In the meantime, the office needs to pay employees and suppliers.

Unless the medical office has a large cash reserve, it is likely to run into problems. Sooner or later, it may run out of cash. One alternative is to go to the bank to obtain a business loan or similar product. That works, sometimes. But banks can be hard to work with and seldom increase loans after giving them. What happens if your medical office keeps growing and needs more cash?

Medical receivables factoring is usually a better alternative. Medical factoring eliminates the payment wait, getting your insurance claims paid in as little as 2 days. This streamlines cash flow, allowing the medical office to easily meet its obligations.

Factoring receivables is simple and works as follows:

1. The medical office sends claims to an insurance company
2. A copy of the claims is sent to the factoring company for financing
3. The factoring company advances between 60% and 85% of the claims
4. Once the claims are paid, the transaction is settled

Invoice factoring is relatively easy to obtain and quick to set up. The biggest requirement is that the medical office be well run and that it bill private insurance companies or Medicare/Medicaid. Factoring lines can be set up in as little as 5 days. The cost of factoring varies and will be determined by a number of parameters such as the types of claims you handle and the size of the claims.

If you own a medical office that is growing, sooner or later you’ll run into cash flow issues. Unfortunately, every business that is growing – regardless of industry – runs into them.

When faced with cash flow problems, most medical offices try to get a business loan or a line of credit. Although business loans can work well, they are not a panacea. For starters, they are not easy to get. But more importantly, they have set maximums. This means that you may outgrow the business loan if your business keeps growing quickly. This is a very important point because once you have outgrown a loan, it is very difficult to try and get a new one. The first one must be paid off.

A better option may be medical factoring. Medical factoring is a financing tool designed to help medical offices. It eliminates the 60 to 90 days it takes to get claims paid and accelerates payment time to between 2 to 7 days. This can be a huge advantage if slow paying claims have put you at risk of:

1. Missing payroll
2. Missing rent or other payments
3. Delaying important hiring decisions

Medical factoring can provide you with:
1. Funds to meet payroll
2. Funds to pay rent and vendors
3. Financing based on your claims. The more you bill – the more financing you get

As opposed to common business loans, medical factoring is easy to qualify for. The main requirement is that your office be up to date in taxes and be free of any tax or commercial liens. And it’s also quick to set up. It usually takes about 10 days to set up an account for initial funding, but all subsequent fundings happen within 24 hours of submitting the request. The process is very simple:

1. You submit claims to insurance companies and send a copy to the factoring company
2. The factoring company advances between 70% – 85% of your net expected collections
3. You get immediate funds. The factoring company waits to get paid
4. Once the factoring company is paid, the transaction is settled.

Because of this, medical factoring is an ideal tool to streamline your medical office’s cash flow.

Hurry up and wait. If you own a pharmacy that is billing private insurance companies, HMO’s and Medicare/Medicaid you know the meaning of that phrase very well. Hurry up and wait is what happens after you submit client claims for payment. You wait 30, 60 and sometimes 90 days before you get paid.

In the meantime, you still need to pay rent, meet payroll and pay your suppliers. Paying them on time is critical for the success of your business.

So, what can you do if you cannot afford to wait to get paid? Going to the bank won’t help you unless you have been in business three years, have great credit, plenty of assets and can provide three years of audited financials. Without them, banks will seldom lend you a dime.

But there is a financing tool that can provide you with the financing you need. Not only that, as your sales increase, so does your financing. This tool will allow you to have the funds to pay rent, meet payroll and pay your suppliers. It eliminates the hurry up and wait game that insurance companies play.

It is called medical factoring.

Medical receivables factoring provides you with financing based on your slow paying insurance claims. As opposed to bank financing, medical factoring is easy to qualify for and can grow, as your business grows.

It works as follows:
1. You bill insurance companies, Medicare/Medicaid and HMOs as usual
2. You then submit your invoices to the factor for financing
3. The factoring company advances you up to 85% of your expected collections
4. The remaining 15% is kept as a reserve.
5. You get immediate use of the money. The factoring company waits to get paid
6. Once the factoring company is paid, the remaining 15% (less a fee) is rebated

Invoice factoring streamlines your cash flow and allows you capitalize on your biggest asset: your slow paying claims from insurance companies. It is an ideal tool for new and growing pharmacies or healthcare providers who need the cash flow to grow and take their business to the next level.

Most healthcare businesses have to wait between 15 to 150 days to get claims paid by private insurance, Medicare/Medicaid and HMOs. Although most payments are made in 15 to 45 days, a simple change in billing codes or a request for additional documentation can add weeks or months to the expected payment date of a medical claim.

However, if you own a healthcare practice, DME, hospital or testing center you have expenses that must be paid like clockwork. Payroll needs to be met. Rent needs to be paid. Equipment must be bought. Not surprisingly, all these expenses have one common element – you either pay them or you go out of business.

This leaves you with two possible options. Either you must have a cash reserve sitting at the bank or you need to get financing to cover the wait.

Many healthcare businesses try to get a business loan or a line of credit. Although they can work reasonably well, they have one serious drawback. They have limits. And once you reach them, you are usually out of luck if you need additional financing.

The best alternative is to factor your medical receivables with medical factoring. Medical factoring provides you with financing based on your insurance claims, eliminating the wait and providing you with funds to operate your business. And opposed to traditional financing, you have no set limits. You can factor as many insurance claims as you can generate. It’s really a tool for growth.

Factoring is easy to implement and incorporate into your business. Here is how it works.

1. You send your claims to the insurance company and to the factor
2. The factor advances you up to 85% of your expected net collections
3. 15% is not advanced and is used as a reserve to handle charge backs
4. You get immediate use of the funds while the factoring company waits
5. When the claim is paid, the transaction is settled

Since factoring relies on the insurance company’s payment habits and financial strength, it can be a great tool for new and growing businesses that may not qualify for – or have exhausted – their bank options.

One of the biggest challenges for staffing company owners is meeting payroll. Employees must be paid every week – without exception. However, paying employees can be very difficult if an agency does not have predictable or reliable cash flow. What is worse, waiting for a payment from a slow paying client can seriously jeopardize the agency’s ability to function.

This situation, unfortunately, is quite common in the staffing industry.

What is the solution? When owners or managers face slow cash flow their first instinct is to try and get business financing from their local bank. However, they soon learn that getting a business loan is very difficult. Most banks require that the owner have an extensive business history, spotless personal credit and substantial collateral. Unfortunately, businesses seldom qualify for small business loans.

Nevertheless, there is an alternative that can help you finance you staffing agency. It’s easier to obtain than a business loan, can be set up in days and is available to most business owners. And, it provides staffing agencies predictable cash flow.

The solution is called invoice factoring. Factoring provides you with an advance on your invoices from slow paying clients. That advance – available soon after you invoice for your work – can be used to cover payroll and other expenses. In effect, factoring receivables provides you with predictable cash flow enabling you to better operate your staffing company.

How does invoice factoring work? Well, it’s a simple solution. It works as follows:

1. You deliver a copy of the time sheet and invoice to the factoring company
2. The factoring company advances up to 90% of the invoice within 24 hours
3. Once the invoice by the customer the transaction is settled

Factoring fees can range from 1.5% to 4% per month and are based on your business volume and other criteria.

One of the most attractive features of factoring is that it is easy to obtain. Most staffing agencies will qualify provided that they do business with good customers and are free of problems. Factoring invoices is an ideal solution for both established and new companies and can help propel your business to the next level.