In the trucking and transportation industry, keeping a positive cash flow is key to keeping your business sustainable. With so many costs including fleet growth and management, equipment repair, as well as driver wages and benefits, it is vitally important to keep a steady flow of cash at all times. But many in the industry will tell you that larger customers (especially big corporations) often take up to three months to pay on their outstanding invoices, which can be a difficult hurdle to overcome.
In 2018, more and more trucking and transportation owners have been looking to freight factoring to help them secure the up-front cash they need to keep operations running smoothly. Freight factoring — also knows as transportation factoring — allows you to sell your outstanding invoices at a discount and receive an advance up to 97% of the invoice face value. With factoring from a reliable partner, you can sell your unpaid invoices to access needed funds immediately.
Because freight factoring is not a loan, you do not create new debt on your balance sheet – instead, you sell your outstanding invoices at a discount, and the factoring company then collects the payment on your behalf. Freight factoring companies provide a number of financial services to trucking companies on top of invoice factoring including AR management, unlimited credit checks on your current and prospective customers, fuel discount cards, and more. If you’re the owner of a trucking business, you can qualify in mere days, even if you are just starting up or happen not to have the world’s best credit — simply check out this blog for tips for your transportation company or trucking business if you’re planning on exploring the benefits of invoice factoring.
While some trucking companies use freight factoring to mitigate short-term cash flow issues, most trucking and transportation companies actually factor their invoices as part of a long term financial strategy, one tool among many on a financial toolbelt. Funding of this type gives you the wiggle room you need to take on more clients and more business because with the leverage offered by factoring your invoices, you no longer have to wait 60 to 90 days for the working capital your business needs — allowing you to harness maximum cash flow.
Accutrac Capital, for example, offers a number of competitive options that can help trucking or transportation businesses of any size and at any stage of development, including:
Flat Fee Factoring
- A simple option with an easily-calculatable one-time cost
- From 1.59% for up to 90 Days
Factoring Line of Credit
- Designed for larger fleets and well-established carrier operations
- From 0.022% per day
- A flexible line of credit providing maximum value and control
- Starting at only 0.49% for up 10 days
- The ideal funding option for carriers whose customers pay their invoices quickly
The state of readiness offered by transportation factoring allows you to generate revenue from invoices that are otherwise not helping you build your business. This allows you to allot the money wherever it’s needed, while also fostering better driver recruitment and retention — two important elements of any good trucking company. Being able to provide driver benefits, pay salaries on time, and keep your fleet in tiptop shape means you are always ready to seize the next opportunity.