In today’s current, challenging, economic climate many fleet owners are feeling the pinch when it comes to cash flow. One option for solving a strained cash flow situation is to incur debt. But with debt, of course, there is the cost of debt that has to be dealt with. So, many fleet owners are turning to factoring programs to keep cash flowing when their accounts receivables payments are not arriving on time.
What is Financial Factoring?
Factoring is a financial transaction tool that allows a fleet owner to sell its accounts receivable invoices, at a slight discount, to a factor, like Fleet One. Once the sale is completed, the fleet owner would have immediate access to the money. Many customers of fleet owners are forced by economic conditions to take longer than usual to pay accounts payables. Factoring is a way to increase cash flow quickly.
The Difference Between Factoring And A Loan
Lines of credit, or other bank loans, require that a firm be “credit worthy” before they can obtain a loan. However, the factor company bases its decision on the value of the accounts payables (the asset). More importantly, using a factoring company does not involve getting a loan. The fleet owner would simply be “selling” an asset for the needed cash.
Factoring offers many advantages to the fleet owner
1. When you begin to use a factoring service, you often receive funding for your qualified accounts in 24 hours or less.
2. Using factoring to stabilize your cash flow will help your credit standing because you will not have debt showing on your balance sheet. And, the additional cash will allow you to pay your own bills on time.
3. Your administrative costs will be less because the factoring company takes care of the steps necessary for processing and collecting your invoices.
What account management services can you expect from Fleet One Factoring?
- Accounts receivable financing programs that are custom-designed to match your fleet’s specific needs.
- Full credit services on your customers to ensure you get paid for making your deliveries.
- Collection management services that improve your cash flow and reduce collections risk due to bad debt.
- Real-time, online, account management and accounts receivable information reporting to assist you in managing your customer relationships and your business.
Call Fleet One today and let us show you how you can use factoring to its fullest advantage for your fleet - 877.275.8801 or www.FleetOneFactoring.com.
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