Timely Invoice Payouts
Factor Financing or simply “Factoring” is one of the world’s oldest forms of commerce, and today accounts for over $3 Trillion in annual transactions. Though widely-used in the Transportation sector, the benefits of factoring are still misunderstood by some carriers and brokers.
What is transportation factoring?
Factoring is a form of asset-based lending in which you select and sell outstanding invoices to a factoring company, “the Factor”. In turn the factor gives you a cash advance equal to 90-95% of the invoice amount. The remainder is held in ‘Reserve’. The factor then takes over the responsibility to collect on the invoice directly from your client. When your client pays an outstanding invoice amount to the factor (30 – 90 days later), you will often receive a rebate of ‘Reserve’ funds, less the factor’s fee – typically 1.5% – 5% of the invoice amount.
What are the benefits of factoring?
Even if a company is profitable and growing, if you don’t have enough cash flow to support that growth, you could still go out of business. Factoring provides the necessary cash flow to stay in business and allows you to accept new business as quickly as you can get it. Some trucking companies can grow from 1-2 trucks to 10-20 trucks in less than a year! Also if bank financing is not an option, factoring gives you the necessary work capital so you DO NOT have to take on an investor who could take control of your company.
Finally if you are going to factor, insist on a non-recourse factoring. Non-recourse factors guarantee their cash advances, while full recourse factors will “charge back” their cash advance if your client takes too long to pay. You will be required to repay the money or replace the invoice plus their fees. Moreover since non-recourse factors do not “charge back” they have built in incentives to treat your clients with the highest level of respect, which makes you and your company look good.
Announcement: J D Factors – New Western Canada Office
J D Factors’ western Canada office is expanding again! To meet the demand of western Canada’s transportation sector, J D Factors has recently moved its western Canada office in Calgary to a new larger location only minutes from the TransCanada Highway #1. According to J D Factors’ Canadian Vice President Tina Capobianco, this is part of the firm’s plan to provide western Canada with the best factoring service possible: “Western Canada has always been important to J D Factors. That is why we opened our first sales office here in 2015. But sales are only part of the equation. J D Factors is committed to providing the best service of any factor in the transportation sector. In the last two years we have seen such significant growth in the West that we just opened a new office to provide both sales and on-going account services. J D Factors is the only non-recourse factor to provide sales and service operations based in western Canada.”☚