Invoice factoring, also known as asset-based lending, refers to a financial transaction in which a business sells its invoice to invoice funding companies at a discount. As a small business owner, using invoice factoring can significantly improve your business financial status. For instance, a trucking firm can sell their unpaid invoices to a transportation factoring company which in turn funds the business with immediate liquid cash.
If you need instant cash, you can outsource the services offered by a transportation factoring firm. You can leverage your unpaid invoices to generate quick cash flow which can help with everyday business operations.
Here are a few ways you can exploit invoice factoring and boost your freight business.
1. A Borrowing Arrangement with Minimal Risks
Invoice funding is a lower risk option compared to loans from other financial institutions such as banks. The funds you get from commercial factoring companies are levied against your outstanding invoices. This means that in case you are facing a financial crisis, you cannot lose your business or other owned assets.
Cash from transportation factoring companies is given independently without collateral. Whether you are going through a financial hurdle or merely looking to expand your business, you can rely on money factoring companies to help you navigate such situations. Since the invoice factoring companies act on the unpaid invoices, you can rest assured that they will only dip into funds that you can afford to spare.
2. Easy Qualification Criteria
Unlike banks that ask for your business credit score, money factoring companies have relatively simple requirements. For a transportation factoring contract to be beneficial and sustainable, your trucking company must issue invoices for services of a reasonable amount. Moreover, your business must have commercial or government clients.
Invoice funding companies only finance businesses whose invoices have not been pledged as collateral to other financial institutions. Your customers’ credit history also comes into play when looking for finances from factoring companies. If you are uncertain whether your business meets the essential qualification criteria, it is advisable to speak with a business factoring service provider.
3. Quick Access to Liquid Cash
Invoice funding companies provide instant working capital to help you cover a funding gap caused by slow-paying clients. Having quick access to cash ensures that if a business opportunity arises, you can take advantage of it with the funds at hand. As soon as you meet the minimum qualification criteria, you can get the funds within a few hours.
For your trucking company to grow, you will need to seek a transport factoring company with quick response times. The minimal paperwork involved greatly simplifies the invoice factoring process. Therefore, it is strongly advisable to inquire about the necessary paperwork from your small business invoice factoring company to hasten the application process.
4. Funds Growth by Increasing Working Capital
Once you have met the minimum qualification criteria, your invoice factoring service provider converts a percentage of your unpaid invoices into cash. You can use this advance business capital to expand your client base and increase your brand awareness. Additionally, invoice financing can also help you exploit fruitful opportunities that could significantly grow your business.
A boost in working capital and increased cash flow are just what you need to grow your business. As a small-scale business owner, business factoring companies can eradicate your financial worries and give you the confidence you need to grow your enterprise. You can focus on the future of your trucking company without fussing over high-interest rates and rigid terms of borrowed funds.
Top transportation factoring companies provide a more convenient way of accessing capital while offering flexible and transparent terms. You can approach a transport factoring business and get instant cash. For your convenience, invoice factoring services aim to eliminate personal collection of funds from your customers as they pay directly to the factoring company.