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Freight Brokers- Factoring Your Freight Bills Will Help Your Cash Flow

Mar 22, 2008
You are in a profitable business, if you run a freight brokerage company. However, it can prove very challenging financially if you do not have a nice cash cushion to help pay off your drivers on time. Your clients may take anywhere from a month to two months to clear your bills. In the absence ready availability of liquid funds to take care of such payments, you may start thinking of obtaining bank finance. However, banks will require a sound past business record to provide the necessary financing. This can be a problem if you have a new business.

In such a situation the best thing is to do is to avail freight broker factoring services for your financing your freight bills. This is one way in which you can get immediate funds to take care of business expenses and above all, for making payments to your drivers. It is also much easier to obtain funds through factoring your bills than when you try to arrange finance from other sources. When you are a freight broker, it might work a bit differently as compared to traditional factoring where many factors work with you to find ways for making timely payments to your drivers, while others may pay them on your behalf.

Freight broker factoring starts working when you send copies of your bills to the factor after delivery of the freight. The factor advances to you the full amount of the freight bill after deducting his fee. This makes funds available to you for immediate use. The factor waits and gets paid once the transaction is settled and your client makes the payment. Freight factoring also offers a big advantage against business loans as it grows with your business. You qualify for more finance as the number and value of your invoices increase.

However, you must choose your factor intelligently. The terms of different freight brokerage factors may be similar but not identical. A good factor will have flat rates. There would be no hidden costs related to aged receivables or any holdbacks. All collection activities would be handled by the factor, making it easy to operate by paying the factor's fee. Once you approach a factor for selling your invoice(s), your request should not take more than an hour to get approved. The speed at which you are able to get the cash for freeing your bills is the essence of factoring service, as it is meant to accelerate your freight bills for the payment of your invoices.

You pay the factor his fee to overcome the 30 to 60 day delay it usually takes for your clients to clear your bills. The application process should also be easy and should not require more that one page to be filled, to provide necessary particulars. The fee should also be flat, with no setup, monthly or termination fees involved. You must be able to receive the funds within twenty-four hours of forwarding your freight bills. The factor should also be a reputed one, preferably with offices from coast to coast. Factoring is an ideal solution for overcoming your financial worries as you move forward in your freight brokerage business.
About the Author
Freight Factoring service provider Phoenix Capital Group can help you grow your logistics business. Check out how easy our truck factoring products are to use. Quick factoring quotes can be found at http://www.phoenixcapitalgroup.com
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