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What is Factoring?

Factoring is a simple cash flow solution, which turns long due freight bills into quick cash. Although, it may seem like a new concept to many industries, factoring has been around for quite some time now. Surprisingly, factoring began during the Mesopotamian times, and it gradually emerged as a common financial practice before 1400s in England.

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So, let’s take a look at some of the industries that commonly use the process of factoring:

  1. Transportation
  2. Freight bills are generally not paid until well after delivery, and it certainly involves a good deal of expense to get them delivered. Although, it’s not a big deal for larger companies, in case you’re running a small to medium sized fleet, immediate cash is often needed to pay for operating costs such as payrolls, maintenance and fuel costs.

  3. Oilfields and Gas
  4. Running an oilfield and gas operations undoubtedly requires huge capital investment and yet payment terms can run up to 60, 90 to 120 days. Its only when you have immediate access to cash in this industry, you can explore the full potential and take advantage of the robust demand for work in oilfields and gas industry.

  5. Government
  6. The lengthy and complicated terms and conditions of invoices can weigh down upon government contractors. Accounts receivable financing not only provides the government instant access to required cash to fund the contractors, but the factor assumes the receivables and risks that come along with them.

  7. Staffing

Dealing with long invoice terms of 60 to 90 days and managing human capital at the same time can get very challenging. When you’re backed with a staff most often there are pre-employment and payroll taxes which go along the paychecks. Invoice financing, on the other hand provides you instant access to cash you need to pay your employees and tax liabilities and also help to fund budding opportunities.

Two Easy Ways for Drivers to Submit Legible Paperwork When On Road

Truckers want to get paid fast and so, it is important for them to send in the freight bills to their freight factor as quickly as possible. Occasionally, when faxed paperwork is submitted, many a times the documents are not clear enough to read, which delays the funding process. In the presence of clear and legible paperwork, the process of auditing becomes much faster. As a result, truckers can get paid earlier.

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Mentioned below are two simple solutions that can be used by truck drivers to send their freight bills in a hassle free manner:

 

1. UPS or FedEx

In case your client requires originals then the best way to send in the paperwork to your freight bill factoring company is through UPS or FedEx discount programs. But make sure that a permanent tracking code is associated with your shipment. Remember, your freight bills are as good as the real money; so, be wary to track the shipment to prevent it from being lost.

 

2. TripPak EXPRESS Envelopes

If you’re looking for a cheaper alternative to FedEx then TripPak EXPRESS is the ideal solution for you. A highly convenient service, TripPak EXPRESS allows you to submit the paperwork of one load to your freight factor by dropping in the documents into a sealed TripPak EXPRESS envelope and then place it in a yellow TripPak EXPRESS box. The drivers can halt at over one thousand TripPak EXPRESS locations at various truck stops across nation to drop off these envelop.

7 Common Mistakes Small Business Startups Make

Every successful business was once a small dream. If you too aspire to take your start-up to a global level, avoid making these 7 common mistakes many others have made in the past and regretted.

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Missing Out on Preplanning

In order to become successful, a business must work upon pre-planned schedules and targets. It helps the business to attain a certain level of discipline and makes every person more responsible for achieving their targets.

Identify the organization’s driving force. Figure out if profits matter more or number of customers. Once you know where you’re headed, work becomes focused and it takes lesser time to strike at the bulls eye.

In case a given plan is failing, pre-planning will give you time to make required changes and implement them too. Last minute changes are always very confusing and may lead to business disruption.

Lack of Financial Support

In the beginning you may work at a break-even point of no loss no profit, but if you plan to grow business, constant investment is a must.

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And leave aside investment; you need to have ample cash in your pocket to meet daily expenses incurred for running a business. Start-ups may have lack of surplus funds to devote to daily expenses. For running business smoothly, you will require financial support.

If not banks, try using the services of invoice factoring companies, who provide cash deficient start-ups with instant cash.

Making Unrealistic Plans

Having a concept in mind and implementing it are two different things.

The road to success will pose several expected or unexpected challenges, and one should be prepared to handle both.

Be confident about your abilities and potential, but never become unrealistic about them.

Failing to do Smart Business

In order to see your business flourish, you may want to take everything in your hands. However, this is not a productive way of handling business.

Be smart and learn the art of making others work under you. Save your time for the most important things, while making others responsible for other less important things. Remember, division of work is important for individual growth and that of the organization as well.

Unprecedented Hiring

If more hands mean more work, it also means you shell out more salaries.

If your business can’t afford a large manpower, don’t bother with hiring. Hire people you can easily pay at the end of every month.

When profits begin to increase and your business is capable of earning salaries for more people, you may hire.

Follow the golden rule – hire people you can pay.

Unplanned Investment

Start-ups always look up to bigger players as role models and try to imitate them in every way.

But, don’t forget they have ample resources to make new investments, whereas you may not. Don’t get easily fascinated by new equipment launches or advancements. They may not be very cost-effective for you.

Be watchful. Try to gather resources instead of spending available resources.

Besides, stay away from investments that will make tax deduction.

Taking Short Cuts

We talked about being smart in the points above, but unfortunately, many start-ups consider short-cuts and smartness to be synonymous.

Don’t take any short cuts with efforts. There is no substitute for them. What you can do is divide the responsibility so that no one’s shoulders are overburdened.

Remember, success has no shortcuts.

6 Reasons Why Savvy Business Owners Are Turning To Invoice Factoring

An increasing number of small to medium sized businesses are exploring the potential of invoice factoring and what value it provides to their company. But, why are these companies raving about this simple and cost effective solution of alternative financing and how are they using it to help meet their businesses needs?

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There are numerous reasons why companies are turning to factoring as the financial option for their business. Mentioned below are top 6 reasons why factoring is becoming the most trusted financing alternative for savvy business owners:

  1. Forget Everything About Debt

It should be noted that factoring does not create debt. It is not a loan; it is in fact the money which you’ve already earned. While factoring your invoices, all you have to do is pay a small sum of money in the form of a fee to gain instant access to your earned money a little bit sooner.

  1. Get Over The Stress of Invoicing

Chasing down payments from a customer can be quite stressful. An invoice factoring company, on the other hand takes up the responsibility to collect all the payments on your behalf. As a result, you get rid of a highly tedious and time-consuming process of collecting payments from your clients.

  1. Opens Up Opportunities

If you wish to expand your business, you need to maintain a steady and healthy cash flow. Accounts receivable financing provides you immediate access to the much required money to help your company reach its goal.

  1. Factoring is Flexible

There are many invoice factoring companies, which offer you the flexibility to factor only the customers you choose – providing you added freedom. Smart companies prefer to utilize the process of factoring only for specific customers. So, are you the fortunate one to have a customer who pays in 15 days? There’s no need for you to factor the – it’s that simple.

  1. A Cost-Effective Solution

Opting for internal back office support can cost a great deal. Factoring on the other hand costs a few cents on the dollar. Compared to the expenses of hiring an employee to manage your accounts receivables, Accounts Receivable Financing certainly makes a good business sense.

  1. Expand Your Business

Majority of the factoring companies generally don’t set maximums and as a result you won’t outgrow factoring. Even if the number and size of your invoices continues to grow, you can keep turning them into immediate cash to fuel continued expansion.

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