Freight Factoring Has Many Benefits...
Factoring has been around for thousands of years for a reason; it solves cash flow constraints caused by unpaid invoices. It helps a business that is struggling with cash flow because of invoices that have not been paid, factoring can also help a company go after and secure those potential customers who are requesting credit terms of 30 to 90 days, but the company is unable to grant because it would tie up cash.
How does it work?
Simple, after you have delivered the product or services rendered to your customer and issued your invoice under agreed terms of 30 to 90 days, you then sell that invoice to the factoring company, the factor will advance you anywhere between 80% to 95% of that invoice generally within 24 hours, so, the business will continue to generate cash flow on those open invoices with credit terms. And once the factoring company collects on the invoice, the difference of 80% to 95% that was held back is returned to you, less the small.
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