The freight industry is fast paced, and whether you are a newcomer or an established brand, you cannot wait weeks or months for payments to come in. Factoring is a great way to improve your cash flow and help your business grow by allowing you to exchange invoices for immediate cash, but how exactly is factoring different from a traditional bank loan? The following is a list of some of the benefits of choosing a factoring service over a bank.

Accessibility

Banks are notoriously stingy when it comes to approving loan applicants. Even if the bank approves you for a loan, the amount might not be enough to meet your needs. Your credit score, lack of collateral and financial history will all be important factors in your approval. Factoring companies don’t look at the applicant’s financial history, so it is easier to get the money you need.

Time

Bank loans take a long time to process. In the freight industry, each day you are left without the proper capital to pay suppliers is a day you miss out on business. Factoring companies can get you the cash you need when you need it.

Additional Services

Banks are limited in the services they provide. Factoring companies can provide a wide range of services beyond supplying capital. Factoring companies often provide administrative support, online record keeping, and other business solutions for your company.

Liability

Bank loans demand set interest rates and terms that you must commit to without knowing what your future holds. No matter what happens to your business, you are liable for your loan payments. According to the website of TBS Factoring, factoring is an advance on work you already completed, but have not yet been paid for. Non-recourse factoring allows you to sell invoices for advanced cash without being liable for unpaid invoices. If a customer fails to pay an invoice, the factoring service absorbs the loss. Your business will be unaffected and the capital given to you remains unchanged.

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