Owing a freight brokerage business can be very rewarding and profitable. But as a freight broker, you know that your business is very cash intensive. Your drivers depend on you to be paid on time. However, clients can take up to 60 days to pay for their loads.So you end up caught in the middle. Caught between drivers that need cash now and clients that want to pay slowly. The math does not work. And unless you have a nice cash cushion in the bank, something has to give.
Factoring companies are experts at financing businesses with little past history but great future prospects. Basically, the factor eliminates the 30 to 60 days it takes to get your freight bills paid. With factoring, you get your freight bills paid in about 2 days. That gives you the cash you need to pay drivers and meet other business expenses.
Here is how factoring works:
Factoring costs are driven by three variables: a) monthly financed volume, b) your customer credit worthiness and, c) how long the freight bill goes unpaid. As a rule of thumb, rates go between 1.6% to 3% per month, depending on these variables.
If you have big amount of money, it is actually a great thing. You will be able to purchase the things that you want. However, it is also sure that you demand to have bigger amount of money by considering the fact that the prices of the things at this recent time are getting higher and higher. Well, for this matter, you might wonder about the ways that can multiply the amount of the money that you have.