Even the best-functioning company can find itself in serious financial trouble due to clients if payments aren’t received on time. Long payment terms, common in the TSL (Transport, Shipping, and Logistics) industry, cause payment bottlenecks, which can quickly turn into debts. Factoring is the solution to this problem—here are the 7 main benefits of this service.
Factoring significantly shortens the wait time for payment from issued invoices. You can submit it for financing as soon as it’s issued and receive payment the same day. The application is processed online, and the verification procedure is fast and efficient.
Irregular cash flow can leave your company without funds for essential expenses. In such cases, external financing is needed, often with high costs. Factoring speeds up the invoice payment not only quickly but also cheaply, without requiring long-term commitments.
The sharp rise in interest rates in recent years has also increased the costs of loans, credits, or leases. Factoring is immune to such market changes. The amount of financing is equal to the invoice amount, and the commission is based on that, not on interest rates.
With factoring, you can offer clients more attractive terms, such as longer payment periods, without harming your company’s cash flow. Regular cash inflows also allow for investments in short- and long-term business growth, without the fear of financial problems.
Factoring also helps save on costs associated with late payments. At Transcash, any potential debt collection is included in the service cost, so you don’t have to pay extra. Invoice financing can also protect you from client insolvency. By choosing factoring with protection (microfactoring) or insurance (full factoring), you reduce the risk of losses due to unreliable partners.
Clients accustomed to late payments may change their habits under the pressure of factoring. Factoring involves initiating debt collection procedures immediately after the invoice due date, which puts pressure on clients to pay on time. Additionally, the factor handles debt collection on their own, so as a business owner, you don’t need to take action to recover payments.
The final point is one of the most important—with factoring, your company can ensure constant, regular cash inflows, leading to financial stability. This allows you to calmly plan expenses and investments, take advantage of growth opportunities, and devote more time to executing new business plans.
If you’re still unsure if factoring is right for your business, try it by financing a single invoice. It’s the best way to evaluate the service with the aim of implementing it permanently in your company.
