Often, trucking services are forced to wait weeks, even months, before they receive payments from their business associates for services rendered. Since bills are often quite large, these companies may find it hard to stay afloat while waiting for the money to come in. To keep their finances running smoothly, many truck services choose to enlist the services of a truck factoring company.
Truck factors are third parties that work in a similar manner to a loan agency. When a company performs a service for another business, the factor pays the bill immediately and then bills the other business, so that the company that performed the services can receive money as soon as possible. In return for their services, the factor keeps a small percentage of the original bill.
Choosing the Right Plan for You
When choosing a truck factor, it is important to consider whether you want a recourse or a non-recourse plan. The different plans work well for different types of businesses.
- Recourse. Under a recourse plan, the trucking organization is not responsible for the unpaid bills of their clients. In return for offering this service, the factor keeps a slightly larger percentage of invoices than under other plans. Recourse plans work well for smaller, newly-opened businesses.
- Non-Recourse. Under non-recourse plans, the trucking organization keeps a larger percentage of the payments they receive. However, if a client fails to pay their bill, the trucking company is partially liable for the loss.
It is important to evaluate the benefits and risks of each type of factoring plan and choose the plan that works best for your business.
To learn more about truck factoring services, visit the website of TBS Factoring Service, LLC.
Choosing a Trucking Factor
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