How Factoring For Trucking Companies Stimulates Growth and Helps Maximize Cash Flow

By  //  May 23, 2018

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Owners of trucking companies both large and small will routinely tell you how easy it is to find yourself facing cash flow problems. There are many causes, but the most common is working with customers who do not pay their invoices in a timely fashion. Rather than getting paid the moment the carrier delivers its haul, some customers take one, two, or even three months to make a payment.

Meanwhile, as an owner, you have to keep up with overhead costs, paying for fuel, driver wages and benefits, repairs, and fleet upkeep. Most trucking companies, from the smallest startup to the largest national chain, experience moments where they do not have the cash on hand to meet the needs of their business. And often, this happens because they are waiting for payments to come through from a number of clients at once.

If you are the owner of a trucking company, and your customers have excellent credit but are simply slow in paying their invoices – and typical financing through a bank or other lending institution is simply not possible – you might want to consider enlisting freight factoring companies to help you maximize cash flow and manage your accounts receivable.

Unlike traditional financing options, freight factoring can be provided relatively quickly. Applications are processed often within two days and once you start factoring your invoices, you can receive the funding upfront often on the same day you deliver a load.

This quick timeframe makes factoring invoices particularly attractive to companies without the cash on hand to take care of immediate cash flow issues. Furthermore, unlike the interest rates that typically accumulate with commercial loans from a bank, invoice factoring is usually executed for a small, one-time fee.

Transparent plans from factoring companies that specialize in the trucking and transportation industry – such as those from Accutrac Capital – have become very appealing in the last few decades to carriers that need immediate cash. Flat fee factoring is one plan that costs only a small percentage of the value of the invoice (starting at 1.59%).

Clients in return immediately receive 97% of the value of the invoice (less the fee), while the factor then pursues payment on the original invoice. Factors will also hold 3% of the value of the invoice in reserve until they have collected on the invoice at which point they will pay it back to the carrier.

Flexible factoring is also available for clients who have quick-paying customers, which comes at a rate of 0.49% for up to 10 days, while a factoring line of credit is the perfect tool for a fast-growing larger enterprise and starts at 0.022% per day.

Freight factoring is perfect for:

• Startup trucking companies in need of low price insurance for commercial trucks

• High growth enterprises with insufficient working capital

• Businesses in transition or who are experiencing a tough year

• Businesses experiencing a change of ownership

If your outstanding invoices are preventing your growth and overall sustainability during tough financial times, consider transportation factoring to help you recover cash flow quickly and re-establish your forward momentum.