Which Accounts Receivable Factoring Company Should You Choose?

By | January 3, 2020

Freight factoring or accounts receivable factoring is a successful and effective method to maintain a smooth cash flow that is often used by many trucking companies. It has undeniably become the best and the most popular funding method used by many industries.

Freight bill factoring or invoice factoring or bill factoring are the other popular names of the accounts receivable factoring. It has become a concept of an increased relevance because it permits the companies to maintain their cash flow against the unpaid bill and invoices. Having cash flow is quite important for the companies to run their day to day business and make various payments like procuring the raw materials, paying the salaries to their employees, making several overhead expenses, and much more. 

There are two broad categories of accounts receivable factoring services. One is the recourse factoring services and the other one is the non-recourse factoring services. 

 Non-recourse factoring: In a non-recourse factoring service, if the client does not end up paying the bills to the freight factoring company, the business owner is not held financially responsible for the same. Non-recourse factoring is obviously more costly but a preferred choice for many companies as it does not involve any risk if their client becomes a defaulter. 

Recourse factoring: in the concept of a recourse factoring, the business owners are responsible and liable for making all the payments against their invoices, whether or not their client pays them. The fee of the recourse factoring is kept less as compared to the non-recourse factoring as it involves a great risk.

To get any of these freight bill factoring or accounts receivable services, the businesses need to deliver the load to the clients, generate the bills, and then submit a copy of that invoice or bill to the freight bill factoring company for receiving the payment. The businesses can wither email the soft copy of the bill or they can fax the same. 

Upon receiving the invoice, the factoring companies begin to authenticate the bill. After the bill is validated, they begin to provide you cash. It takes just a day or two to release the payment. The money of up to 90% of the amount is soon given by the factoring company. The factoring company pays the remaining balance too after deducting their fees when the client pays the complete bill amount to them.

This factoring method is a great way to convert the non-paid bills to immediate working capital. The accounts receivable companies provide immediate cash and take up the responsibility of collecting the bills from the clients. It has always helped the businesses to increase and maintain their regular cash flow.