Business

Fine Factoring for the Best Policies for the Company

A company with invoices or receivables can make sure to collect money from them very quickly by “giving in” to a specialized financial institution called the “factor “. On the other hand, it does not cover the risk of non-payment and will be used on the guarantee fund supplied by the company if necessary. Note that the factors offer credit insurance contracts that allow the company to be fully protected.

Both parties sign a factoring contract that details the total amount of receivables that can be assigned. This amount is called the total outstanding amount. The factor company is the with the best deals.

That the factoring contract is indefinite, which means that the company can choose to leave at any time, subject to a 3 months’ notice and the terms of the contract signed beforehand.

The factor also determines the guarantee fund upstream of the signature of the contract, on the basis of a percentage between 5 and 25% of the total outstanding amount. This rate is determined by the risk that the factor believes to take and the negotiations that may take place. Thus, the factor levies on the invoices assigned to it a percentage equal to the rate of the guarantee fund until it reaches the expected amount of the latter. It will be used to cover (at least partially) the factor in case of unpaid or expensive recovery procedures.

Now, let’s explain this history of outstanding and guarantee funds with an example

Let’s say that a company chooses to use factoring and negotiates a total outstanding of $ 100,000 with its factor (the sum of the receivables that it can sell). The latter assesses the risk incurred (litigation, unpaid…) and determines the rate of the guarantee fund.

Then, the time to feed the guarantee fund, the factor takes a percentage on each invoice that the company gives him.

Once the amount of the guarantee fund is reached, then the company can be financed up to 100% of the assigned receivables.

On the other hand, there are a number of costs inherent in the factoring that the company will have to pay to the factor:

The fees

The factoring commission, which takes the form of a percentage of the turnover that the company, pays to the factor in exchange for its services. Generally between 0.7 and 1.5%, this rate is determined by the factor on the basis of several criteria, such as the turnover achieved over the previous year, the financial health of the company’s customers, or the amount of bills to be processed.

  • The financing fee is proportional to an interest rate negotiated with the factor, the amount drawn on the factor’s account and the average payment term of your receivables.
  • To know that in case of termination of the factoring contract during the journey or its non-renewal, the amount of the guarantee fund available is returned to the company.

Note: It is not possible to use factoring to finance bills for individuals. No exceptions apply to this constraint, so this is a point to consider before moving towards a factoring contract.

Preferable Options for the Freight Options

Freight transport is one of the main stages of order processing in a company. The calculation of freight directly influences the price of the product, which can determine the competitive value that the company will have on the market.

This calculation can be complex and become a factor that makes it difficult for managers to maintain effective budget control over logistics.So we have prepared this post to show you in a simple and straightforward way how freight is calculated by carriers and what factors affect this pricing. You can find the load board for truckers perfectly now.

Fees

To price this service, carriers can use different variables in the equation. But there are fees to which they are all subject, making the values ​​to some extent similar.

The transportation of goods in business relationships generates responsibilities for the provision of the contracted service because it generates the execution of the activities that are the object of the agreed business between the parties interested in the acquisition of goods.

Transportation refers to the physical movement of goods, from the place of production or storage to the sale, in the right place with the buyer.

Transport Deployment Modes

The transport process can occur by:

  • Inland freight: shipment of the product from the place of production to the place of beginning of international transport.
  • Inland freight at the place of destination: movement which starts at the end of the international transport, from the place of landing to the destination of the product.

International transport

International transport is the movement between two countries governed by an internationally accepted contract between the contracting parties.

  • To choose the appropriate modality, certain factors must be analyzed, such as pick-up and drop-off points, urgency of delivery, freight weight, availability, cost of service and frequency.
  • Air Transport: Air transport is used to transport large and small goods, which are contracted companies specialized in the transport of goods, according to a procedural criterion required by the competent bodies, such as receipts.

Due to the speed used, air transport is the best way to preserve the health, integrity and freshness of the product, but its cost is much higher than other forms of transportation.In general, shipments are not directly negotiated by exporters with airlines, except in large quantities.People interested in sending their products abroad use air cargo agents, who are knowledgeable about flights, companies, routes, goods, and have an easy way to get discounts on freight with the cargo consolidation.