To understand whether or not your company is in need of somebody who can explain the factoring process to you, commercial factoring companies might be able to guide you in the right direction. However, you must first know what factoring is and what these companies to. From there, you might be able to determine if it is the right process for you.
What is a Factoring Company?
Factoring is a type of process where a business sells its invoices to a third party known as a factor. This type of invoice funding is becoming more and more popular, especially freight capital factoring involving trains and that in which involves other large modes of transportation that we utilize every single day. A factor works to collect payment for these invoices through the customers who use the business for services. There are many reasons why companies use the small business factoring process, but one of the most popular reasons is wanting to receive cash as quickly as possible for invoices and receivables. It can take customers quite some time to pay for services and if a company chooses to factor, there is a higher chance that they will receive their money quicker.
When a company is attempting to reach certain goals, customers sometimes don’t pay as quickly as they should, which can put you in a difficult position. The transportation companies around the world are in need of factoring when services fall behind in payments. This is because transportation is always growing. In fact, at any given time, approximately 12 million trucks, rail cars, and more are moving goods across the transportation network. Factoring is especially huge in the commercial trucking industry, with commercial factoring companies taking over so that businesses don’t have as much stress on their backs. The Federal Motor Carrier Administration says that over 5.9 million commercial vehicle drivers are operating across the U.S. at any given time, which means that there is a need for the factoring process.
Choose Commercial Factoring Companies for Your Needs
With nearly 28 million small businesses operating across the United States at any given time, there is a necessity for factoring, especially because businesses are growing all the time. Factoring can be helpful for many of these businesses and allows you to keep large amounts of your own money. For instance, the factor helps to advance most of the invoice amount up to around 70-90%. When the bill is paid by the customer, the factor ends up remitting the balance and applies a fee. Invoice factoring is a propelled method that converts large invoices due within 90 days into immediate cash that your small business can use, which can be a huge change and upgrade for you.
If you believe that a factoring company can make all the difference in your small business, you want to act quickly, because you could be losing out on vast amounts of income until steps are taken. It can be expensive to handle your business any other day, so put your trust in the hands of a business who has your best interests in mind.