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Transportation companies generally need a steady flow of finance in order to keep the business running efficiently. The economic situation in a business can become sticky when expenses continue to rise but clients' payments are only due thirty days later. In such situations freight bill factoring might be an option. This concept refers to the financial transaction wherein a company's invoices (receivables) are sold at discounted prices. The organization that buys the receivables is referred to as the factor. The company immediately receives a cash installment from the factor upon selling the receivables. As soon as the debtor pays the amount owed, the factor pays a second installment, minus a fee, to the company. In essence, the transportation business parts with a certain amount of their invoice in exchange for immediate financing. The difference between such a transaction and a bank loan lies in the immediacy of payment. Bank loans generally have to go through strict procedures before being approved. The bank loan is also usually based on the company's credit safety and not the value of the receivables as in this case. The costs involved in a bank loan are usually lower though. It is important to keep in mind that every factoring organization does not necessarily operate in the same way. Some will provide extra services such as doing the invoicing on behalf of the seller. Others will withhold the second installment and claim back the first if the debtors do not pay their bills. That is why it is important to understand the terms and conditions of each organization. Apart from understanding the terms and conditions, it is also necessary to look at the rates of the organizations that offer these services. Make sure that no hidden fees are involved. It might prove beneficial to talk to someone who has experience with freight bill factoring that can offer sound advice. Fund My Freight (http://www.fundmyfreight.com) is a freight bill factoring was created to service the underserved small trucking company owner. Funding trucking companies for several decades and have seen just about ever scenario possible through every economic environment.
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