Why Trucking Companies Rely On Transportation Factoring
BY: MICHAEL SANDUSO ON WEDNESDAY, APRIL 11, 2018
Any expert in the trucking and transportation industry will tell you that it is full of challenges — from low profit margins to the high cost of fuel, not to mention costly repairs and considerable overhead. During transition periods when cash flow tends to dry up, owners and operators in the trucking industry need a reliable, quick way to access funds to keep their businesses running smoothly.
Transportation factoring grants you access to cash within 24 hours
Transportation factoring (also known as freight factoring) is the selling of one’s freight bills, or accounts receivable, to a third-party factoring company at a discount. This allows companies in the trucking and transportation industry to turn their Accounts Receivable (or AR) into immediate cash, maximizing cash flow and keeping everything in the black.
Transportation factoring services can keep positive cash flow because they help you turn invoices of slow paying customers into an immediate resource. Rather than waiting 30, 60, or even 90 days for some customers to pay, invoice factoring allows owners to focus on what they do best — running their business through efficient operations and growth.
Transportation factoring allows trucking companies to capitalize on the strengths of their receivables. The more clients — and therefore invoices — a company accrues, the more access it has to factoring funding. This type of factoring grants owners access to cash which they can then use to meet overhead costs, keep drivers behind the wheel, and seize new opportunities.
Factoring invoices in this way is a healthy, essential financial tool for many trucking and transportation companies. Cash flow is king in this industry, and having access to same day funding when you need it can be the difference between success and failure. A factoring company can help you fund your business — whatever its size. From large, national fleets to small start up enterprises, factoring is a mainstream tool that keeps businesses afloat even during times of economic turmoil.Freight factoring companies can help sustain businesses during financial hurdles, transitional periods, and other trying times. Rather than relying on the often-lengthy application process required by banks and other lending institutions, freight bill factoring offers simple, hassle-free qualification.
Transportation factoring comes with clearly defined terms
Depending on the transportation factoring company you choose, the terms are often clearly laid out and transparent. At Accutrac Capital, for example, you have access to up to 97% of the value of the invoice (minus a small factoring fee, and with the remaining 3% held in reserve), and you’ll often receive the money the very next day. The factoring company will then collect the invoice on your behalf. Once the invoice is collected, the reserve funds (typically 3%) are returned to you.
Because freight factoring companies are often specialists in the industry, they also understand the ins and outs of your business. These professionals work routinely with companies just like yours, so they are easy to work with and speak the language of the trucking and transportation industry.
The accessibility of transportation factoring combined with the expertise offered by third-party factoring companies make it a popular cash flow improvement option. Banks and other lenders generally aren’t known for their focus on customer service or expediency, which gives factoring a leg up by comparison.
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