Ask any expert in the industry, and they will tell you that the trucking and freight business is not for the faint of heart. The industry comes with many challenges from low profit margins to high fuel costs as well as expensive maintenance and repair costs. Essentially, if you’re in the business of trucking you’ve got to love it to make it work. This doesn’t mean that there aren’t solutions to help you grow your business and achieve financial success — you just need to know where to look.
Freight factoring is an invoice financing option that helps trucking businesses through tough times. Freight factoring companies enable decision makers at truck companies to sell invoices at a discounted rate for immediate access to cash – which is why so many companies use freight factoring for trucking as part of their monthly financial strategy.
If you’re in the trucking and freight business and you’re experiencing a lean quarter or going through a transition, factoring can provide you with a reliable and speedy way to get the funding you need.
Get Cash in 24 Hours with Factoring
By factoring your accounts receivable, you can get the cash you need upfront (often within 24 hours), which can help you pay your bills, accept new contracts, and cover payroll and other operating expenses.
Rather than jumping through the nearly impossible hoops required to secure a bank loan, freight factoring is available to any trucking company owner that routinely delivers loads for reputable customers. If you own a trucking start-up, or you don’t have the best credit in the world, factoring is still a perfectly viable option for you because factoring companies provide you with generous advances based on the credit of your customers.
Freight Factoring Has Clearly Defined Terms
Here’s how the process works. Once approved, you can begin factoring invoices for deliveries you’ve already made, and the best factoring companies will offer you an advance of up to 97% of the value of the invoice. They will charge a small factoring fee that varies depending on your plan, but with that cost comes a bevy of value-added services including AR management through collections on the outstanding invoice, and risk mitigation through unlimited credit checks of current and prospective customers.
Factoring is Custom-Tailored to the Trucking Industry
Some factoring companies, such as Accutrac Capital, work exclusively with owners of trucking businesses, and fully understand that 60- or 90-day waiting periods for payment are more than what a typical trucking company can handle. Because factoring companies like this one work so closely with the trucking industry, they understand your business and its challenges. While there are numerous options for financing, freight bill factoring allows you to secure money through jobs you’ve already done, making the business of collecting on those invoices less strenuous than other options.
What to Ask a Potential Factoring Partner
Before signing a contract with a freight factoring company, it pays to ask some very important questions about the terms of your contract. For starters, you should know if there’s a lien being filed, and if so what type.
You should also ask about the length of the contract. As a carrier, are you allowed to use freight factoring on a customer by customer basis, or is there a long-term contract necessary? You should also ask about the various plans on offer, as some of them will be better for small companies, and others designed for larger fleets. Does the factoring company have monthly minimums, and what do fees and penalties look like?
These are all valuable questions to bring to the table and will help you find a factoring company that accommodates your individual needs. Whether you operate a large fleet, or a one-truck start-up, consider the above and you will be well on your way to securing freight factoring for your business!