Any business needs cash flow and transport companies are no different. This is why, as a manager, you need to rely on services that will increase cash flow and minimize your company’s debts. This is where freight factoring comes in handy. This service is convenient and offers instant cash flow to trucking companies.
What is freight factoring?
Freight factoring for trucking company is when a transportation company sells some or all of its invoices to a factoring company. The factoring company will offer the transportation company instant cash in return for the sale of the invoices. The factoring will take over the billing and charge a fee for its services. This process is easier than applying for a loan.
Small fleets and freight factoring
Start-ups and small business struggle a lot when it comes to securing a loan from a bank. This is because; they have little credit history and collateral. This implies that small felt companies have a difficulty when they want to purchase more trucks and expand. However, by working with a trucking freight factoring company, you will enjoy the following benefits:
This is the main reason why most small fleet companies go for a factor. Unlike banks, factoring companies offer faster payments and are more reliable. In fact, most factoring companies offer 80-95% of the loads value up front. The remainder is usually paid within a month. Freight factoring will give you access to unlimited funds which you might have, otherwise, waited months for. Factoring companies will minus their own management fee from the payment.
Using factoring will lower the risk of non-payment from big contracts or new customers. Most factoring companies operate under a non-recourse’ model. Therefore, if they don’t get paid, you will still keep the money they paid for your invoices. You will always get paid no matter what.
Minimal invoicing hassles
Invoicing can be hectic. Well, factoring will reduce your invoicing workload. Rather than submitting your invoice directly to customers and then following up when they aren’t paid, just submit all your documents to your factoring company. They will carry out collection and billing for you. This gives you more room to focus on other areas of your business.
Is factoring right for you?
If your main problem is not being able to pay for business expenses because shippers are paying slowly, factoring is what you need. To qualify, your:
· Invoices should be free of encumbrances.
· Clients/shippers must have a reputable commercial credit.
Most small truck fleets can meet these requirements. Boost your cash flow today and expand your company.