If you have a good base of creditworthy customers who traditionally pay you, but take a long time, flat fee recourse factoring can be a simple, cost-effective factoring product for your US trucking and transportation company.
What is flat fee recourse factoring?
Factoring is when you sell your US freight bills and trucking accounts receivable invoices from creditworthy customers to a factoring company at a discount in exchange for immediate cash. Because it's Ôflat fee', it includes a set fee, paid upfront, ALL IN. Flat fee recourse factoring, like its name implies, is a type of flat fee factoring where, if your customer defaults on payment of the invoice, the factoring company has Ôrecourse' to collect the balance from you.
Typically, here's how flat fee recourse factoring works:
- You sign a factoring agreement with a factoring company.
- You send your freight bills or trucking invoices to the factoring company who advances you up to 95% (minus your flat fee amount) within 24 hours.
- The factoring company invoices your customer.
- Your customer pays the factoring company directly.
- The factoring company reimburses the balance to you.
- If your customer defaults after a defined period of time (say 90 days), you would be required to reimburse any amounts advanced plus fees.
A lower fee structure than non-recourse factoring
Recourse factoring comes with the lowest cost of all factoring products. That's because you assume the risk if your customer doesn't pay. When deciding if recourse factoring is the right financing product for your US trucking and transportation business, you need to decide if the lower fee is worth the added risk. For example, if your bad debt is usually low and your customers traditionally pay you in a reasonable amount of time, chances are good that recourse factoring is a good fit for your freight and trucking business.
However, if you deal with creditworthy customers but aren't comfortable with risk, or don't feel that your accounts receivable department is producing the results you'd like, flat fee non-recourse factoring may be a better product for you. RememberÉflat fee non-recourse factoring comes with a higher cost because the factoring company takes on the risk if your customer doesn't pay.
Get help if you need it
If you're not sure if flat fee recourse factoring is the best financing option for your US freight broker or transportation business, get advice from the trucking professionals. A reputable factoring company that specializes in the US transportation industry, like Accutrac Capital, will explain all your options to youÉin simple language. Their trucking accounts receivable experts can help you to determine which product is best for your needs.
For more information about flat fee recourse factoring for your US trucking and freight business, visit www.accutraccapital.com.