By 
freight factoring is also called as freight bill factoring. It is a form financing option that a business resort to often. It is a widely used concept in the transportation industry.
What is Freight bill factoring?
As per this concept, the business people or carriers and or brokers take the help of financing companies or factoring companies to improve their cash flow. They send their unpaid bills or invoices to the factoring company that they expected from their slow-paying clients and get cash in return. The factoring company provides the businesses with the much-needed funds so that they can operate their day to day business.
How does it work?
If you think that the whole factoring process is complicated, you must know that it is not. It is a simple method which you will be able to understand quickly. Firstly, you need to know that your company has to finance its invoices by selling it to the factoring company. The factoring giant pays you immediate cash against the bills furnished by you. This way, you receive immediate cash to run the company.
Freight bill factoring Ohio offers two types of transactions. They are:
Single-instalment transactions: In the single-instalment transaction, which is the simplest type of factoring option, the factoring company makes a single payment. This method of financing is very popular in new and small business companies. In this type of transaction, you get a full advance with an offer of a flat-rate charge. Normally, the advance paid is about 95% to 99% of the total bill amount. The advance is rendered by the factoring company to the business bank account of the business company. Sometimes, it can also be offered as a fuel card.
The remaining transaction amount of 1% to 5% becomes the charge of the factoring company as the service charge. Since this method provides a big advance amount, single-instalment plans are more expensive than the two-instalment plan.
Two-instalment transactions: As per the two-instalment transaction, which is usually the best fit for a midsize and larger business organization, the factoring company splits the transaction of the amount into two payments. The first instalment is referred to as advance. It is about 90% of the total value of the bill. The same amount is submitted in the bank account of the business company by the factoring company. They can also offer fuel card. The amount is provided within one business day of receiving the bill.
The remaining amount is also deposited in the business company’s account once the factoring company receives the payment from the client. The factoring company also deducts their charge from this amount.
Read for more info: factoringfast.com
