If you’re the owner of a trucking or transportation company in the US, you understand how integral it is to find the right financing. It’s unwise to think that all financing is the same or that ‘money is money’ because choosing the wrong type of financing can be detrimental for trucking businesses of any size.
In recent years, freight factoring has become more and more popular as a funding option for trucking companies. Below you’ll find a number of benefits unique to financing freight bills — which will hopefully help you figure out if this type of financing is a viable option for your trucking business or transportation company.
Factoring Offers Great Initial Advances
Most factoring plans or lines of credit come with high advances, typically 90% to 95% or even higher. Some companies — like Accutrac Capital – offer 97% advances on a number of their factoring plans. Some factoring companies even offer fuel advances in the form of fuel cards to further help companies manage cash flow.
Approvals Are Fast
Factoring is usually approved within 1 to 2 business days, while invoices can be factored within 24 hours (often the same day). Because of this fast approval rate, freight bill factoring services can help any company manage cash flow emergencies quickly.
Factoring Is Flexible
Perhaps the greatest advantage of factoring freight bills is that you can grow a factoring line of credit alongside your revenues. While more traditional loans from banks or other lending entities only work for a fixed amount, a factoring line can actually increase alongside your business. In addition, a factoring line of credit does not come with difficult applications and high interest fees often seen with banks and other lenders. You never pay interest on a factoring plan — instead you pay a nominal factoring fee when you receive your advance.
You Can Take On More Work
Because factoring can help you improve your cash flow, you will be able to take on more loads and slower paying customers. Cash upfront allows you to meet a number of industry expenses, including payroll, employee benefits, fleet maintenance, fuel needs, and other overhead expenses.
While some companies rely on freight factoring to solve short-term cash flow emergencies, most companies actually make long-term use of factoring plans. This is because the funding you receive through freight bill factoring lets you take on new customers and larger contracts because it gives you the peace of mind knowing that you no longer have to wait 1 to 2 to 3 months for payment on a delivery. Factoring can help any type of trucking company, including:
·Companies going through a change of ownership
·Companies who can not acquire the funds they need from traditional lenders
·A company that has not already committed their AR elsewhere as a form of collateral
·Small startups or larger fleets
·Companies experiencing a challenging year
If you’re in need of a flexible funding option, freight factoring can help trucking businesses meet expenses and increase cash flow precisely when they need it. If you’re interested in learning more about freight factoring or if you’d like to get started on the application process, contact a factoring company today.