What is factorings? How can Factoring to Grow your Business?

Factoring can grow your business, but this growth depends on some scenarios. Let’s begin with the common scenario:

You want to be a trucker but come to find that, on average, customers take 30-90 days to pay you for your services. Not only is this inconvenient, but if you abide by the timeframe it is unlikely that your business will stay afloat. That is, unless you have enough money saved up to pay your living expenses, insurance, phone bill, etc. for a three month period.

You could go that route, but many who come into the industry are not in that position. Many truckers use factoring to cut the 30-90 day period to 24-48 hours. Here’s how it works:

1. 1. “You submit the invoices for purchasing 
   2. The factoring company sends you the advance (e.g., 80% of the invoice) 
   3. Your client pays 30 to [90] days later 
   4. The factoring company sends you the rebate (e.g., 20%, less the fee)” [1]

Essentially, for truckers, factoring companies are the road between the driver and his or her client. This road is paved with a timescale of 30-90 days in which drivers are paid, usually, with two installments: the initial percentage and the remainder with a factoring fee.

What are the benefits of factoring?

Factoring can grow your business through immediate funds to pay yourself, pay your employees on time, pay off debts, have funds for repairs, cover living costs, etc.

References:
[1] https://www.comcapfactoring.com/blog/how-does-invoice-factoring-work/

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