Viability of Invoice Discounting?

Discussion in 'Freight Broker Forum' started by ElijahJohn1, Feb 6, 2019.

  1. ElijahJohn1

    ElijahJohn1 Light Load Member

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    Is there a reason I never hear anyone discussing invoice discounting, only factoring? From what I understand it's cheaper and ensures the shippers you work with never find out about your need of factoring, but you have to perform all the collection responsibilities that a factoring company would normally do. Thanks
     
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  3. Midwest Trucker

    Midwest Trucker Road Train Member

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  4. PPDCT

    PPDCT Road Train Member

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    Had to google it myself. Similar to factoring in that you end up owing the factoring company funds, but the issue a "loan" against the invoice. Still leaves you doing the collections, etc without any of the extra support from a factoring company. Further, you're even more on the hook if your customers don't pay.

    Here's an article explaining:

    Invoice discounting
     
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  5. Midwest Trucker

    Midwest Trucker Road Train Member

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    I see. Thanks.

    Guess that would do as your describing Elijah. I bet it would be pricey and risky but could accomplish what you want. It says in the article it’s best for highly profitable companies. Brokerages can be highly profitable but I’d say by and large the margins are fairly thin especially starting out with new customers that you had to get aggressive to get.
     
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