One of the most useful tools to many small and medium sized business owners is bill or invoice factoring. This can be especially helpful to truck drivers. Traditional loan financing can be restricting, and if there are credit worthiness problems, it can mean that you do not get the capital you need for every day expenses.
Bill or invoice factoring allows you to bypass traditional loan financing and still get the capital you need. This service is performed by a factor, and this factor pays you in advance for the invoice. Instead of having to wait 30 to 60 days for your customers to pay you, you can instead get the cash almost immediately. This eliminates the problems of being front loaded, helping you meet your expense needs.
As helpful as bill factoring is, however, it is not the only service provided by many factors. Indeed, many factors see how useful it can be for businesses if they can go to one place for a variety of necessary services. And if you have the right kind of agreement set up with your factor, the cost of these services can be included in the factoring, meaning that you do not have to pay up front for them – they are just taken out of the advance you get for the bill or invoice.
Other services available from invoice factors
Some factoring service providers offer additional services that complement the bill or invoice factoring. Here are some of the services that you might find offered by factors:
Invoice services. Many small and medium sized businesses find it more cost and time efficient to outsource their invoicing. Many factors can take care of this on your behalf – even if the invoices are not being factored. Invoices can be created, stored in a computer database and mailed out. Additionally, payments can be entered and clients can receive regular reports.
Collection services. It can be time consuming to try and collect from customers. Many factors also provide collection services. You can turn your collections over to them, and they will work to get your payment. In some cases, the factor may buy the invoices at a discount and just pay you cash for them. This is known as discounting. Be aware that this is different from collections, though.
Accounting services. Some factors offer accounting services and even payroll services. This can make things easier for you, if you use invoice factoring and accounting services from the same company.
Bank relationship services. If you are concerned with maintaining bank relationships, and communicating with financial institutions, some factoring services can provide help in this area as well. Letters of credit can also be issued, along with other financial services. Check to see what sorts of services along this line your factor might provide.
Credit counseling and management. Because factors are experienced in dealing with cash flow, management and credit issues, they can be helpful in these areas. Some can get you credit counseling and other credit management services in addition to helping you with your cash flow.
Factor services for trucking companies
Trucking companies have additional needs that can be met by bill factoring service providers. Some of the services that can be obtained from factors specific to trucking companies include:
Messaging. Often, truckers can be difficult to reach. They may need to leave messages or get them. Some factors can actually help coordinate the process, ensuring that communications get through. It saves you the worry of trying to do it yourself.
Load matching. One of the worst things for a trucking company is having to drive empty trucks. All that happens is that you are stuck paying for fuel – without transporting cargo for paying customers. Factors can work out logistics to help with load matching so that your trucks are rarely empty.
Fuel card assistance. Instead of trying to have cash available for all of your truckers, it can help to have fuel cards. Some factoring services also offer assistance with setting up and coordinating fuel cards for truckers.
Any of these additional services can be very helpful – especially for trucking companies. If you can combine them with the services offered by your bill or invoice factoring provider, than you can make things more efficient and less costly in the long run. Plus, when your services are consolidated, it means you have fewer payments that tie up capital. And when the company can use your invoices as collateral for the other services, it is even better.