Ask any trucking expert what they expect for 2018, and they will tell you that one of the major hurdles of running a fleet or transportation company is the high expenses under which one typically operates. Regardless of the state of the economy, American trucking businesses routinely run on little cash flow, in part because their customers may not make payments on their invoices for 30 to 90 days. Meanwhile, a trucking company owner still has to find a way to pay for repairs, payroll, and gas expenses. This is why freight bill factoring can be a huge boon for these types of businesses because it gives them a way to access funds they need without delay.
Freight Bill Factoring In A Nutshell
Freight bill factoring is a cash advance option for trucking that allows you to sell your outstanding invoices at a discount to a factor who purchases them upfront and then collects on the invoices, charging a nominal factoring fee to the carrier.
A factoring company such as Accutrac Capital will offer a number of different factoring plans depending on a trucking company’s needs — and when you work with a factoring company that specializes in trucking or transportation factoring you know they understand the ins and outs of your business. Flat fee factoring, for example, costs only a small percentage of the invoice (starting from as low as 1.59%). Clients receive 97% of those funds, minus the factoring fee, and get the remaining reserve balance once the customer pays on the invoice. Flexible factoring is also available for carriers whose customers typically pay within 10 days, and these plans carry a rate of 0.49%. A factoring line of credit, meanwhile, is a great boon for faster growing enterprises and starts as low as 0.022%.
The Advantages Of Factoring
Whether or not invoice factoring is an important part of your business the fact of the matter is that it is fast becoming a mainstream financial strategy for freight and transportation companies of all shapes and sizes. The first major advantage is that businesses can access the funds they need within a day or two as opposed to waiting months to be paid for an expensive job. Another advantage is that the factoring company takes on the responsibility for collections, allowing carriers to avoid the time-consuming accounts receivable duties that would otherwise be required. Factoring provides funding solutions to:
- Small or start up operations
- High growth companies that lack working capital
- Companies in transition or who are experiencing a tough year
- Businesses experiencing a change of ownership
- Companies unable to secure the funds they need from a bank or other traditional lender
If you operate a trucking company of any size and you need a boost to your cash flow while you wait for customer payments, freight bill factoring may be the solution for you. Factoring allows you to meet your necessary expenses, organize your Accounts Receivable, and concentrate on growth rather than collections.
Founder Dinis Guarda
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