If you’re a freight broker, you know that tough times can hit the industry hard. Shippers are always looking for ways to save money, and when the economy takes a turn for the worse, they’re even more likely to put the squeeze on their logistics providers. Invoice factoring for freight brokers can help.
Hard economic times are exactly why it’s more important than ever for freight brokers to have a solid financial foundation — and invoice factoring can be a key part of that foundation. Here are four ways that invoice factoring can help freight brokers weather tough times.
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Here’s How It Works
Let’s say you’re a freight broker and you have an outstanding invoice for $5,000. You need the money to cover expenses, but your customer hasn’t paid yet and it will be another 30 days before they do.
This is where invoice factoring comes in. You can sell that $5,000 invoice to a third-party company for $4,500 in cash today. The third-party factoring company for freight brokers will then wait to get paid by your customer and will take on the risk if your customer doesn’t pay.
Why Should You Consider Invoice Factoring?
1. Provides a much-needed infusion of cash
When business is slow, cash flow can dry up quickly — and that can put a serious strain on your ability to meet your financial obligations. Invoice factoring can provide the cash you need to keep your business running smoothly, even when payment from your customers is delayed.
Additionally, it takes the risk out of waiting for customers to pay their invoices—if a customer doesn’t pay, the third-party company that purchased the invoice is out the money, not the freight broker.
2. Allows you to take advantage of early-payment discounts
Many shippers offer early-payment discounts as an incentive to get their invoices paid quickly. But if you’re waiting on payment from your customers, you may not be able to take advantage of those discounts. With invoice factoring for freight brokers, you can get paid right away, so you can take advantage of early-payment discounts and improve your bottom line.
3. Frees up time for you to focus on running your business
Chasing down late payments can be a time-consuming process — time that could be better spent growing your business. When you factor your invoices, you’ll free up time that you can use to find new customers and build relationships with existing ones. And that will ultimately lead to more revenue and profits for your business.
4. Peace of mind in tough times
Running a business is always a bit of a rollercoaster ride, but during tough economic times, the ups and downs can be even more pronounced. When you have a strong financial foundation in place, it’s easier to weather the storms — and invoice factoring for freight brokers can play an important role in building that foundation.
With the extra cash flow and peace of mind that comes from knowing you’re always going to be able to meet your financial obligations, you’ll be able to keep your eye on the prize and focus on what’s really important: growing your business.
5. Helps you manage seasonal fluctuations in business
If your business experiences seasonal fluctuations – such as increased demand during the holidays – invoice factoring can help ensure that you have the cash flow you need to meet those demands. By selling your invoices during the busy season, you can get the cash you need upfront and avoid having to take out a loan or tap into your line of credit.
Invoice factoring for freight brokers is a great solution for companies who are waiting on payments from their customers. By selling invoices, freight brokers can get the cash they need to keep their businesses running smoothly without having to wait several months for payment.