February 13, 2010 -
The logistics companies provide services for safe delivery of goods from one
location to other location.
Packing
and moving services are also included in the logistics services.
Although logistics services are a great help to those who relocate and also
a good business to be in, often smaller and medium logistic services face
the problem of finances. Their customers, especially where
corporate relocations are
involved, pay after 30 to 60 days. Meanwhile, the transportation company has
to pay instantly for fuel,
packing
supplies, truck maintenance charges and other overhead expenses. In
such a situation, bank loans seem to be the only solution. However, getting
a business bank loan for a small company is rather a difficult task, not to
forget the cumbersome procedures, high interests and longer period for
approval. As such, freight bill factoring is fast becoming the choice of
such companies as their solution for finance problems.
A factoring company provides cash to the packers and movers against an
invoice of service provided to a customer. It can simply be defined as
conversion of credit sales into cash. In factoring, a financial institution
pays from 80% to 90% of the billed amount immediately after making an
agreement. The remaining amount is paid when the customer pays the debt
after deducting a fee.
Factoring is fast catching up with
packing
and moving companies in India, as an easy alternative to bank loans.
These companies do not have to give any collateral security and interest as
is generally done for getting bank loans. However, factoring too have some
cost which varies from company to company. Generally it remains between 1%
to 3.5% per month. A number of factors affect the cost of factoring such as
the credit worthiness of the logistic company's client as also the credit
period extended to the customers.
Taking the above facts in consideration, it can very well be said that
freight bill factoring is coming up as one of an important
allied services of packers and movers
industry.
