The process of selling structured settlements begins with understanding one’s requirements and the immediacy of the need. This can be done with the help of a financial advisor. In fact, in several states in the U.S, it is mandatory to take legal advice before selling a structured settlement. Brokers who are knowledgeable about the court procedures involved in the sale of a structured settlement can be of great help. Brokers are in contact with numerous settlement companies and upon understanding a seller’s unique requirements they can guide the seller to the most appropriate settlement company. Either with the help of brokers or by searching online, one can select a financial institution that appears to offer the best price for the structured settlement at minimum cost and in as less time as possible. Sellers should also check the prospective buyer’s credentials, the rate of interest they offer, and their record for prompt payments.
Sellers are usually required to fill an application form that provides the buyer with necessary information such as amount required, nature of the structured settlement, and the insurance company. Upon approval of the application, the buyer forwards closing documents to the seller. These should be studied and understood by the seller with support from his financial advisor. Once the provisions mentioned in the closing documents are met, the funds are released to the seller. The insurance company is made aware of changes in ownership of the structured settlement. The receipt of cash flow by the seller is subject to court approval. The court assesses the seller’s circumstances and then decides whether the sale is in the best interests of the seller and his dependents. A court approved sale of structured settlements is tax-free for the buyer and seller.
The cash flow received in exchange for the structured settlement is minus the buyer’s fees and other expenses such as broker commissions, application fees, and legal expenses. These costs are not out-of-pocket expenses for the seller nevertheless they should be carefully considered with respect to different buyers and the maximum amount that can be obtained by the sale of a minimum number of structured settlements.
You are in a profitable business, if you run a freight brokerage company. However, it can prove very challenging financially if you do not have a nice cash cushion to help pay off your drivers on time. Your clients may take anywhere from a month to two months to clear your bills. In the absence ready availability of liquid funds to take care of such payments, you may start thinking of obtaining bank finance. However, banks will require a sound past business record to provide the necessary financing. This can be a problem if you have a new business.
In such a situation the best thing is to do is to avail freight broker factoring services for your financing your freight bills. This is one way in which you can get immediate funds to take care of business expenses and above all, for making payments to your drivers. It is also much easier to obtain funds through factoring your bills than when you try to arrange finance from other sources. When you are a freight broker, it might work a bit differently as compared to traditional factoring where many factors work with you to find ways for making timely payments to your drivers, while others may pay them on your behalf.
Freight broker factoring starts working when you send copies of your bills to the factor after delivery of the freight. The factor advances to you the full amount of the freight bill after deducting his fee. This makes funds available to you for immediate use. The factor waits and gets paid once the transaction is settled and your client makes the payment. Freight factoring also offers a big advantage against business loans as it grows with your business. You qualify for more finance as the number and value of your invoices increase.
However, you must choose your factor intelligently. The terms of different freight brokerage factors may be similar but not identical. A good factor will have flat rates. There would be no hidden costs related to aged receivables or any holdbacks. All collection activities would be handled by the factor, making it easy to operate by paying the factor's fee. Once you approach a factor for selling your invoice(s), your request should not take more than an hour to get approved. The speed at which you are able to get the cash for freeing your bills is the essence of factoring service, as it is meant to accelerate your freight bills for the payment of your invoices.
You pay the factor his fee to overcome the 30 to 60 day delay it usually takes for your clients to clear your bills. The application process should also be easy and should not require more that one page to be filled, to provide necessary particulars. The fee should also be flat, with no setup, monthly or termination fees involved. You must be able to receive the funds within twenty-four hours of forwarding your freight bills. The factor should also be a reputed one, preferably with offices from coast to coast. Factoring is an ideal solution for overcoming your financial worries as you move forward in your freight brokerage business.
Both Herbert Hodges & Kris Koonar are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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