As factoring for trucking companies continues to grow as a mainstream financial option, the factors themselves are developing better features, benefits, and procedures to improve the overall experience for all carriers in the industry.
Freight factoring — also known as transportation factoring — is a helpful tool for any trucking company or broker who deals with cash flow issues because of customers with longer payment terms. Rather than waiting 30 to 60 to 90 days, a third-party factoring company will buy your invoices and pay you upwards of 97% of the value upfront (minus a nominal factoring fee), holding 3% in reserve until collection. They will then pursue the invoice, and once they collect the funds, they will return the remainingreserve amount to you.
This financial strategy is becoming increasingly popular because it allows you to secure the funding you need within 24 to 48 hours of applying. Additionally, transportation factoring offers a number of key advantages above and beyond the securing of immediate cash.
Factoring improves your cash flow
If you are in need of immediate funds, streamlining your cash flow by selling your Accounts Receivable becomes a major tactic. If your clients take up to three months to pay on their invoices, transportation factoring is helpful because it allows you to secure a significant portion of the value of those invoices upfront. The more invoices you have, the more funding you have access to.
Transportation factoring is perfect for:
- high-growth companies without sufficient working capital
- start up operations
- businesses in transition
- companies going through a change of ownership or who are experiencing a challenging year
- companies who are unable to secure funds from traditional lenders
Factoring encourages growth
Once you secure the immediate funding you need, your business is now able to meet its overall operations and overhead costs. You will now be able to haul more loads and take on new clients because you’ll have the necessary cash on hand to pay for expenses. The most important part of your business is moving freight — simply put, the more you move, the more you improve your bottom line. Having a healthy cash flow simply means you have the ability to expand your fleet, take on new contracts, and keep up with technological advances in the industry.
Choose the plan that’s right for you
When you work with professional trucking factoring companies you’ll have a number of plans to choose from, and the one you pick will dependlargely on the size and scope of your business. A factoring company like Accutrac Capital, for example, allows you to choose between flat fee factoring that starts at 1.59% of the invoice value, or a factoring line of credit (designed for larger operations) that costs as little as 0.022% per day. Another popular option is flex factoring, a plan designed for invoices that turn around within 10 days, and that costs you as little as 0.49%.
Factoring allows owners quick and convenient access to funds as well as increased customer service and many factors offer a number of other incentives such as fuel discount cards and accounts receivable management. Consider partnering with a transportation factoring company and enjoy the healthy cash flow injection you’ve been looking for.
Founder Dinis Guarda
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