True or False: Does Factoring Decrease Overhead Costs?

True or False: Larger trucking companies increasingly opt for factoring services to decrease overhead costs and improve cash flow.

...........................

TRUE!

Larger trucking companies are indeed opting for factoring services as a way to decrease their overhead costs.

As a factor, we provide comprehensive back-office support for trucking companies by handling the administrative and financial tasks associated with invoice processing. Here's a breakdown of how it works:

1. Invoice Purchase: When a trucking company completes a delivery, it generates an invoice for the service. Instead of waiting for the customer to pay, the trucking company sells this invoice to a factoring company.
2. Immediate Payment: The factoring company pays the trucking company a large percentage of the invoice value upfront, often on the same day or within a few business days. This immediate payment helps maintain cash flow for the trucking company.
3. Credit Checks: Factoring companies conduct credit checks on the trucking company's customers to assess their creditworthiness and ensure that the invoices will be paid.
4. Billing and Collections: The factoring company takes over the responsibility of billing the customer and collecting the payment for the invoice. This includes following up on unpaid invoices and managing the collection process.
5. Reporting Systems: They provide reporting systems to assist trucking companies with financial management, giving them insights into their financial status and helping them make informed business decisions.
6. Customer Payments: Once the customer pays the invoice, the factoring company releases any remaining balance to the trucking company, minus a fee for the factoring services provided.

By outsourcing these tasks to a factoring company, trucking businesses can focus on their core operations, like hauling loads and expanding their services, without being bogged down by the financial and administrative overhead.