Factoring
Or Invoice factoring is a great way to achieve financial stability and smooth cashflow for your trucking business. But, there’s something else that makes the option even more suitable than other types of financing or business loans – let’s look at the process.
The process to have your invoices factored using debtor finance and receive the cash advance is a very straightforward process as compared to applying for other types of loans.
Here is a step-by-step breakdown of how everything goes:
The first step involves contacting the chosen factoring company and filling out an application. This application gets approved in less than a week and in some cases even can be done on the same day with an approval by return email. That’s fantastic compared to the weeks and months it takes to get a loan approval from some banks. There is almost no downtime for your business.
After your application is approved, the agreements are prepared. These are fairly straightforward and outline what each party should expect. If everyone follows the process everything will go smoothly. Then you can go ahead and submit all your invoices to be factored and once the invoices are verified you should get cleared funds in your account that day or the next day.
This invoice factoring facility will help you establish a dependable and reliable cash flow. This is turn allows you to plan and grow your business.
Some factoring companies will even allow you to factor just a single invoice.
Of course, to factor an invoice using business invoice finance, you must first submit it and have it approved or verified. The freight notes can either be originals or copies. Your factoring service provider will let you know what they prefer. Remember, the invoices must be unpaid, accurate, and for completed work. You can’t get factoring finance on work that is not completed. Also, the invoices must not be pledged as collateral.
Once the invoices are submitted, the factoring provider will review them and even carry out a verification process. Once that is done, you will receive the much-needed cash advance, which will be in the 70% to 85% range. The cash advance will be transferred in cleared funds the day.
For the final step, the factoring company will transfer the pending amount after collecting the entire amount from the customer. A small percentage of the invoice value will be collected as a fee.
That’s it!
