Do you know about factoring? It is a short term management of cash in advance. This cash is provided by the factoring companies to business related people. What is the objective of factoring? The main objective of factoring is to make ensure fast flow of cash to meet the challenges of business life. Therefore you can receive cash from your clients on time with the help of this service. If you want receive cash in advance then you will need to find any factoring company in your city. Make agreement with your factoring company to start this service. After this agreement it will be duty of factoring company to provide you cash in advance. How factoring works? The mode of factoring is very easy. Factoring company will purchase your invoices in advance and they will provide you funds. You will need to provide a list of candidates or clients to factoring company then they will collect cash from your clients. All factoring companies work in this way. They will use their own staff for the collection of cash from clients. Factoring company will charge the 2 or 3% of your invoices in return you will receive the cash on time without any effort.
Advantages of Transport Factoring
In truck business companies receive the payments after few weeks and months from clients. Therefore it will become difficult for company to survive in the market. Transport factoring helps to deal with problem in a better way. You just need to sell your invoices to company and in return you will receive cash on time. The second benefit of factoring in transport business is that you can use your collection staff in any other field for the progress of your business. Therefore your business will grow with the passage of time. Third benefit of transport factoring is that you will receive the payments on time and you can use this payment to purchase the products. You can supply urgent demands of customers. You can purchase the huge orders from market.
Disadvantages of Transport Factoring
Only one disadvantage of factoring service is that they charge higher fee. You would have to pay 3% of your total invoice cost. Similarly your can lose your permanent customers due to bad behavior of factoring companies. Some companies don’t behave in a better way with customers. Therefore you should consider the advantages and disadvantages of factoring service.
