Factoring For Future Growth
This article is about factoring but O’Neill offers a solution that is less expensive than traditional factoring. Click to find out about Hybrid Financing.
Factoring such as account receivable financing allows a trucking company to get paid quickly, sometimes in as little as two days. First the company delivers a cargo of items to a customer, who receives a payable invoice. The trucking company sells the invoice to a factoring finance company at a discount who then immediately pays the company an advance, usually about seventy percent of what is owed.
The customer which received the goods will then pay the entire amount they owe to the factoring company, which upon receipt will then pay the trucking company the remaining thirty percent minus a fee. If a company feels that collecting what is owed from some customers will be difficult and could cost more than the fee charged by the factoring finance company, it will be glad to be rid of them and not have to spend time and money doing collections.
This accounts receivables financing can be used as a great tool for trucking funding whenever the company needs financing to grow. Asset based factoring is another financing idea which is a welcome relief for a small growing business without much capital and many customers which are slow payers. With asset based factoring, the business sells it’s accounts payable which may be past due to a factoring finance company at face value, and immediately receives about ninety percent of what is owed. The customer will then pay the factoring company directly, which will then take over collections for past due accounts just like account receivable financing.
When the factoring company receives the remaining amount that is owed by the customer, it will then pay that to the business minus a fee usually based on the entire amount of invoices payable. Thus this used together with accounts receivables financing are good trucking funding benefits.