Fine Support in The Invoice Factoring in the Freight Transport Business

Factoring did not primarily represent the option to sell potential bad debts, but to procure short-term liquidity through the sale of the receivable on longer-term payment terms. For the entrepreneur, it can be cheaper to pay the factoring fee and immediately receive the invoice amount than having to wait 30 or 60 days for the money.

Freight transportation is a branch of business, demanded as long as legal entities continue to send goods by road, private customers change their place of residence and order products via the Internet. In this article we will look at how to open a transport company for the transport of goods and survive against the backdrop of fierce competition, and in the future take its share in the market and receive a stable income.

Freight transportation

Freight transportation will be in demand until the business will send goods by road, private customers change their place of residence. The net 30 account situation may come any time and you will have to take the proper steps for the same. There the use of the factoring invoices is there.

Dispatching, your fleet or franchise?

Freight logistics has three main directions: you can set up an enterprise with your vehicle fleet, mediate or open a franchise point of the transport company. Identify with the type of activity needed at the start. Each of the directions has its own specifics, which affects the alignment of business processes.

How To Open A Truck From Scratch With Your Own Vehicle Fleet

This business format is suitable if you have a solid hold of funds or sources of investment. Before opening a freight forwarding company from scratch, you will need to buy or rent a car, hire drivers and car mechanics, equip boxes for storing tools.

The lower limit for the factoring business is usually a receivables volume of 500 dollars. Banks do not do factoring with “everyone”. On the one hand, they must be commercial customers; on the other hand, conditions are often linked to the company, for example an annual minimum turnover. Factoring also involves other services. The purchase of receivables also includes continuing accounts receivable, receivables management and, in case of doubt, debt collection.

  • The costs for factoring are quite manageable. They amount to between 1 and 4 percent of the factoring sum. In addition there are the interest rates for a current account credit.

However, not all factors accept the purchase of receivables across all industries. The construction industry in particular can only select from a very small number of factors who are involved in this industry. Although the construction industry is at first glance seen as the business with the highest risk of bad debt, this is not entirely true. The most critical sector is the logistics sector.

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