Attaining year after year profitability is a challenge for any business, and transportation and trucking aren’t immune. The business of hauling finished products and goods from one location to another has long been plagued with difficulties, such as slim profit margins, high expenses, and over-reaching industry regulations to name a few. Add the issue of late client payment to the mix and it’s a wonder any type of carrier including owner-operators achieve profitability at all.
Freight Broker Factoring Solves Slow Payment Problems
As a result of these issues in trucking and transportation, many firms have to obtain additional financing. Business loans might help some established, multi-fleet transportation companies, but they are hard to obtain for most small ones.
Freight factoring companies on the other hand are able to help those in transportation improve their business situation by providing liquidity and enabling owner operators to have money to handle business while waiting to be paid on invoices from jobs they’ve already completed. Transportation factoring companies purchase your verified invoices and pay their face value (minus associated transaction fees). This way, your company can collect on its outstanding invoice in days instead of weeks. That means more hauls, fewer outstanding payments to chase and the ability to focus on the road.
The Benefits of Freight Factoring Include:
- Improved business cash flow and overall business operations
- Obtain capital for your business without taking on additional debt
- Your customers are your credit. Freight factoring is available to most any transportation company regardless of credit history, number of years in business, profitability, and more.
- Submit bids for future jobs knowing you have sufficient working capital.
- Use this money as you see fit to hire additional drivers, pay for fuel costs, repair and maintain aging trucks, or cover the costs of unexpected bills.
- Advance credit checks — factoring companies can perform a credit check on a new or potential client so you can know in advance if they are a good fit for your business.
- Easy to get — Many freight factoring companies will have the ability to upload invoices securely and directly online.
- Find the right company for freight factoring quotes
Get in the Driver’s Seat with Trucking Factoring
So many early stage and small trucking businesses rely on transportation factoring companies that hundreds of specialty firms exist just to serve them. This way, trucking and transportation businesses have the option of choosing a factoring company that specializes in the industry. They can also choose a generalist factoring company that serves a number of industries as well as transportation.
Moreover, some freight factoring companies serve only a specific region or state whereas others have a national reach. If you are a carrier that transports automobiles, oilfield gear and equipment, construction equipment or heavy hauls, you may even be able to find financing companies that specialize in these niche areas.
A Knowledgeable Trucking Factoring Company Can be Your Business Partner
It can be very helpful to partner with a factoring company that knows the common pain points of the trucking and transportation industry. A top-notch freight factoring company will work with you to understand these common problem areas and figure out ways to solve these problems. For example they will work with you to help you decide whether recourse or non-recourse financing is the best option for your firm.
Trucking Factoring Companies Offer Added Conveniences
In fact, the trucking and transportation factoring business is so competitive, many offer unique perks to try to capture your business. Some offer fuel cards that allow your factoring receivables payment to be deposited directly on the fuel cards. A convenience to time-strapped drivers, these fuel cards allow for quick and easy fueling up at the pump. Other trucking financing companies offer same day or 24-hour funding.
Trucking Factoring Companies Can Take over Your AR Duties
As a bonus, many of these freight financing companies will take on the responsibility of handling your back office account receivables and collections duties. Almost every business has to take time away from revenue-generating activities to process accounts receivables and deal with collections issues. This job is universally seen as a nuisance and usually written off as a business necessity. Yet many trucking factoring companies will handle this back office function for you as part of the service they offer.
Flexibility is Another Advantage of Freight Factoring
Another advantage of invoice factoring versus business loans is flexibility. By being adaptable it is able to expand or retract depending on your business needs. For instance, if your business is experiencing a growth phase, submit as many invoices as you want to the trucking factoring company for fast financing on all of them. If your business is experiencing a slow period, submit as few as you need to.
Though some trucking factoring companies do have minimal financing terms, most do not. This way, you decide on the volume of financing that you need. With a loan there is usually very little if any flexibility. You are stuck with the original loan amount issued and if you need additional capital, you must apply for another loan.
So if you are looking for an alternative to a business loan, consider the ways in which transportation factoring can help your business. Flexible, accessible and with a wide range of perks, conveniences and benefits, freight factoring companies can work with you to help get your business on track and to achieve business growth.