Significant Myths about Invoice Factoring
A factoring company specializes in financing invoices for businesses that have cash flow problems caused by clients who are slow in paying. Therefore, if you have a company with such a problem, you need to work with a reliable factor.
The factor will purchase the accounts receivable from you at a small discount. Therefore, the factor holds the invoice and makes a small profit once the invoice is paid. Thus, for this reason, many myths are being said about invoice factoring. Here are some of the myths.
The Factor Takes Control of Your Customers
Instead of waiting 30 to 90 days for your client to pay, you can get a factoring company to receive the money within 24 hours. The company will then handle your accounts receivable and receive any amount cashed in by the client.
It is vital to notice that this does not mean that they control the client. You will still be in contact with your client, and they will pay the day that you agreed. Many people go around saying that business owners will surrender their clients to the factor.
This is not the truth as business factoring companies do not have the customer’s contacts. They only have the account details that the client will deposit money in.
It Takes Months to Fund through Factoring
Commercial factoring companies ensure that you can turn your invoices into cash between 1-4 days after applying. Many people believe that it takes weeks to months to fund your business through factoring.
As long as you are working with the right factoring company and you have given them the records to show that the client took the product, you will receive cash within four days.
If you service freight brokers companies, chances are that you always work with factors. Thus, it can be stressful to wait for money for long. Therefore, factors ensure that your freight bills are completed on time. Trucking factoring service is usually offered on time, and thus you don’t need to worry if you are in the freight industry.
This belief cannot be true because small business factoring works to ensure that the finances of small businesses are well managed. Factoring companies can help small businesses bridge invoice payment gaps with upfront payments up to 90% of the original invoice.
Many upcoming companies have been tremendously helped with factoring companies, and thus this is a busted myth.
Factory Lacks Transparency
Receiving trucking factoring service is as transparent as obtaining a loan from the bank. Papers will be signed by both parties to make sure that all details have been recorded. Factors provide you with information that proves that they are transparent. You will go through the accreditation before signing up any papers.
The Rates are Abnormally Expensive
One of the myths that have made many business people not to work with factoring companies is that the rates are very high. This is not true because the fees range from 1.15% to 3.5% per month. This shows that the rates are not high. They are affordable, and any company can afford them.
Ordering a trucking factoring service is affordable, and therefore you should not be afraid to try it to save the finances of your business. It is crucial to work with a factoring company that suits your preferences.
Meeting Factoring Approval Qualifications is Hard
Meeting factoring approval qualifications is not hard because anyone can quickly meet them. Truck drivers are always on the move, and thus it can be challenging to work with a factoring company that is too demanding. For this reason, factors have made it easier to get financing help from them.
To receive any trucking factoring service, you only need to prove the transparency of your accounts receivable. Transportation factoring is also quick to achieve, and thus if you are servicing freight brokers company is easy.
Trucking factoring service has been made easier by high-end factoring companies. This guide gives you the top myths about factoring companies that you should not buy into, as they are the best solution to help you with business credit decisions.