The dynamics of conducting business has grown increasingly complex over the last decade or two for the trucking and transportation industry, due in large part to a fluctuating economy that becomes increasingly difficult to predict year after year. Volatility in the market along with the increasing demand to embrace technology, combined with slower than expected volumes create hurdles for trucking companies of any size, negatively affecting their cash flow and ability to grow.
This might explain why freight factoring has been gaining such traction among trucking and transportation company owners. Customers often take their time when paying on their outstanding invoices, and waiting 30 to 90 days for payment on work that has already been completed can make it difficult for any owner to meet fuel, overhead, and payroll costs. Freight factoring, also known as transportation factoring, is fast becoming a go-to financial resource for carriers of all stripes, because it allows them to turn a customer’s invoice into immediate cash. But not every factoring company is the same, and so if you are a carrier considering entering into a factoring partnership, be sure that you are diligent in your research, and that you find a company that understands your business.
Find Financing Tailored to You
When looking for a third-party trucking factoring company be sure that you find one specializing specifically in the trucking and transportation industry. A trustworthy, industry-specific factor is better able to help you meet the challenges you face in your industry every day because they understand how the industry works. A trucking-specific factor such as Accutrac Capital understands the operational challenges you face every day as an owner, and they will offer myriad plans tailored to carriers of different sizes and scope. For example, a carrier whose customers pay their invoices quickly might look to flex factoring which starts at only 0.49% for up to 10 days. Larger fleets on the other hand might prefer a flexible line of credit providing maximum value and control, which starts at 0.022% per day.
Find a Factoring Company with a Transparent Process
At Accutrac Capital, the factoring process is simple:
- Your trucking company delivers its freight as it normally would
- You send an invoice to that customer and a copy of the same invoice to the factoring company along with all supporting documentation
- An advance of up to 97% of the invoice value (minus a small factoring fee) is sent directly to your account within 24 hours (with 3% held in reserve until the invoice is paid)
- When your customer pays the amount owing on the invoice, the factoring company pays you the reserve balance owing
Remember, when looking for the right factoring company you’ll want to find somebody you trust and also a company that understands your industry and can respond in a proactive manner should economic turmoil arise. Choosing the right factoring partner will keep your fleet moving even during times of economic instability.