Running a trucking business can be considered a more difficult task compared to handling any other businesses. At some point, a trucking company may suffer from poor cash flow, which is an acute problem in the industry. That is the area where accounts receivable factoring can be of great help by stabilizing your business cash flow.
What is Freight Factoring?
Freight factoring is a financial transaction wherein trucking entrepreneurs sell their businesses invoices to a freight factoring company. The factoring service provider will then give the entrepreneur a sum of money that is less than the total amount of the invoice. The difference will become the company profit for paying your clients debts in advance. They will be the ones collecting your clients payments and making sure the invoices will be paid off.
How can factoring help keep your trucking business afloat?
Working capital
Selling your invoices is the easiest way to acquire additional working capital, which is very much needed in the trucking business. Factoring companies will pay you cash depending on how much debt your clients owe you. Since they only look into invoices and not your business financial status, you just have to offer more invoices and you will be eligible for more cash. With that, you can accommodate more clients and bigger orders.
Continuous profit
Most trucking entrepreneurs wait for at most three months to collect payments from their clients. If you get a factoring service, you will receive 90% out of the total amount of your invoices from the factoring company. This means you can easily move and accommodate your next orders with continuous profit even though your clients take more time to pay.
Productivity
It is hard to keep up with a growing business. More and more orders are being serviced faster than you are being paid for. This can be very problematic if you do not have enough cash to fund the new orders. Accounts receivable factoring will help you avoid this counter productivity risk.
Credit security for start-up companies
Even start-up trucking companies can benefit from freight factoring companies. They will look into the credit-worthiness of your clients and not your company credit history. Therefore, you can secure credit easily as you are selling your invoices rather than being a risk for a loan.
Assistance with sudden increase in demand
Sudden increase in demand can take its toll on businesses. The best way for you to prepare for it is to have a quick inflow of cash. With the help of freight factoring, your cash flow will be secured since you will be paid regularly and quickly. This will help you to keep up with a sudden increase in demand.
Conventional loan alternative
If conventional loan companies cannot grant you with credit, a freight factoring company is more likely to do so. You get cash immediately depending on the credit of your customers and not on the credit history of your business.
What is Freight Factoring?
Freight factoring is a financial transaction wherein trucking entrepreneurs sell their businesses invoices to a freight factoring company. The factoring service provider will then give the entrepreneur a sum of money that is less than the total amount of the invoice. The difference will become the company profit for paying your clients debts in advance. They will be the ones collecting your clients payments and making sure the invoices will be paid off.
How can factoring help keep your trucking business afloat?
Working capital
Selling your invoices is the easiest way to acquire additional working capital, which is very much needed in the trucking business. Factoring companies will pay you cash depending on how much debt your clients owe you. Since they only look into invoices and not your business financial status, you just have to offer more invoices and you will be eligible for more cash. With that, you can accommodate more clients and bigger orders.
Continuous profit
Most trucking entrepreneurs wait for at most three months to collect payments from their clients. If you get a factoring service, you will receive 90% out of the total amount of your invoices from the factoring company. This means you can easily move and accommodate your next orders with continuous profit even though your clients take more time to pay.
Productivity
It is hard to keep up with a growing business. More and more orders are being serviced faster than you are being paid for. This can be very problematic if you do not have enough cash to fund the new orders. Accounts receivable factoring will help you avoid this counter productivity risk.
Credit security for start-up companies
Even start-up trucking companies can benefit from freight factoring companies. They will look into the credit-worthiness of your clients and not your company credit history. Therefore, you can secure credit easily as you are selling your invoices rather than being a risk for a loan.
Assistance with sudden increase in demand
Sudden increase in demand can take its toll on businesses. The best way for you to prepare for it is to have a quick inflow of cash. With the help of freight factoring, your cash flow will be secured since you will be paid regularly and quickly. This will help you to keep up with a sudden increase in demand.
Conventional loan alternative
If conventional loan companies cannot grant you with credit, a freight factoring company is more likely to do so. You get cash immediately depending on the credit of your customers and not on the credit history of your business.