Freight Factoring: Steps for 1st Funding
A soon as a client is qualified, funding can begin. The following is a step-by-step guide from application to first funding.
- Notifying the client’s customers of the factoring arrangements. Once a client starts factoring, they will need to notify their customers of the invoice assignment and that all payments need to go to the factoring company.
- Invoicing and documentation submission. Once the customer has been invoiced, a copy of the invoice, rate confirmation and bill of lading should be sent to the factoring company.
- Invoice Verification. Before the factoring company can provide funding on a submitted invoice, they need to verify that the load has been delivered. A good factoring company will do this in a professional manner, protecting the integrity of the client and expediting the verification process.
- Receive funding on approved invoices. Once the factoring company approves an invoice, the funds will be advanced to the client’s bank account. The advance rates associated with Freight Factoring are typically high, usually ranging from 90% to 100% of the value of the invoice. This amount is usually deposited the same day as the invoice is verified.
- Final Remittance. Once the invoice is paid by the customer, the factoring company will release any amounts due to the client on the invoice.
- Deliver/Invoice/Repeat. the process (steps 2-5) repeats with each invoice that is submitted to the factoring company.
Figure 3.1: The Process for 1st Funding
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