Truck Factoring: How It Can Help Your Business Grow
Businesses are well aware that if they want to grow, they have to outsource certain operational aspects. From hiring tipper trucks or renting delivery vehicles, most of the steps in transporting support services and end products are getting monitored and outsourced.
Due to this, more opportunities are given to operators of trucking companies. The issue now is not on the availability of customers, but on the cash flow of trucking companies to support uninterrupted bookings for its trucks. Some trucking companies rely on trucking factoring to help them finance their projects and bookings.
If you own and operate one or 100 trucks, the thing that you have in common with other trucking companies is waiting for your clients’ payments. Though waiting is already an accepted part of the transportation industry, it does not mean you sit down and do not do anything. Invoice or freight factoring is one of the leading funding solutions utilized by a majority of US-based trucking companies.
Factoring: How does it work?
Invoice factoring or freight factoring refers to the process of selling all or a part of your account receivables to a factoring firm. The purpose of such a transaction is to get immediate cash. The factor will then wait for 30 to 60 days to collect payment directly from your customers. Once your customer pays, the factoring firm will then take a certain percentage from your total invoice as payment for their service.
Freight factoring is also known as trucking factoring. At present, this method is considered as one of the easiest and most accessible ways for trucking firms to improve the business cash flow. With the replenished cash flow, it is easier to continue operating even if your clients still have not paid for the service. This service is particularly valuable for small and new carriers that also incurred debts to pay for operating costs and other start-up expenses.
No Need to Wait for Payment
One of the best benefits of using the services of freight factoring companies is being less stressed while waiting to get paid. Factoring companies make sure that your cash is available within the same day you sold your accounts receivables. With this, you will never be short on funds. Even if you are facing unexpected repairs and unplanned expenses, you can still keep your trucks moving. And as everyone knows it, if the vehicles are running, the money will keep on rolling in.
In essence, you are growing your business. Since you move more frequently and quickly, you also earn more. And more money coming in means more resources to invest in other areas that will grow your company further.
Factoring gives companies flexibility.
Majority of the trucking firms prefer to work with clients that support shorter payment terms. If you work with a factoring firm that can wait until 60 days before getting paid, you would not need to turn down clients with longer but better-paying loads.
Aside from providing steady cash flow, these trucking firms charge a small fraction of the accounts receivable. So, you still profit out of the sold transactions.
As a business owner, the best thing you can do for your business is to work with professionals. If you choose reputable freight factoring companies, you will not only have a fast and steady cash flow, but you will also have peace of mind. Thus, you can always remain on top of your business.