Factoring invoices for trucking or freight companies are unlike any other type of business financing. Small business invoice factoring is perfect for startups and small enterprises that haven’t yet realized their full potential, as it aids in the growth of organizations. We’ll go over some of the advantages of invoice factoring and how it works on this page so you can decide if it’s the appropriate approach for your small business to grow.
Invoice factoring, also known as accounts receivables factoring, business receivables factoring, or invoice financing is selling outstanding client invoices (accounts receivable) to a factoring company, who will subsequently pay you a proportion of the overall invoice amount (minus a discount rate known as a factoring fee).
Small business factoring is a type of accounts receivable financing that converts outstanding invoices due within 90 days into immediate cash for your small business. These companies are also called invoice financing companies.
Looking for business factoring services is not difficult at all. For truckers and freight forwarders, there are freight invoice factoring companies that can help reach better results with your invoices.
Some people might consider factoring as risky, but it really is not. There are a lot of ways for companies to be protected, and this has been a known practice in business for a long time.
Small business invoice factoring is one of the quickest and most flexible ways to raise capital for your company. As a small business owner, you get cash in your bank account nearly immediately.
With business factoring services, factoring companies can help small businesses bridge invoice payment gaps with upfront payments up to 90% of the original invoice. According to the Wall Street Journal, the factor advances most of the invoice amount—usually 70% to 90%—after checking out the creditworthiness of the billed customer. When the bill is paid, the factor remits the balance, minus a transaction (or factoring) fee.
And with nearly 28 million small businesses in the U.S., factoring can do so much for the overall industry. Considering business factoring services can be a good way for small businesses to thrive.