For many trucking companies as well as independent owner-operators, one of the biggest problems they face on a monthly basis is steady cash flow. Without this, it becomes much harder to pay for such things as fuel, equipment repairs, and other things crucial to keeping a business running smoothly month after month. But in recent years, one solution that has come to the forefront has been freight factoring. Also known as invoice financing, it allows trucking companies or owner-operators to sell their invoices to factoring companies, thereby allowing them to quickly get as much as 98 percent of the value of their invoices in cash within 24 hours. If this sounds interesting to you, here are several key points to remember about freight factoring.
Don’t Worry About Your Credit
When you need a loan from a bank, one of the first things it checks is your credit history and credit score. If you have had past problems in these areas, chances are you will have your loan request denied. But with freight factoring, this is something you don’t have to worry about. When a trucking company sells invoices to a freight factoring company, the only credit history checked is that of the customer named on the invoice. If the customer’s credit is satisfactory, the freight factoring company will immediately purchase the invoice. As a result, cash flow problems can be immediately alleviated.
Same Day Cash
As any trucker knows, time is money. Thus, if you are running low on money and are in need of additional fuel, equipment repairs, or new equipment, delays in getting paid can be very detrimental in many ways. However, by using freight factoring as your main source of financing, many of these problems can quickly disappear. Once an invoice is submitted and verified, you can receive an instant cash advance on the same day if necessary. This can be done via check, wire transfer, direct deposit into your bank account, or the funds can be instantly loaded onto a fuel card.
Great Option for New Companies
If your trucking company is relatively new or if you are an owner-operator who has recently gone into business for yourself, freight factoring can be a great way to finance your business during the first few months or perhaps the first year. Since cash flow will undoubtedly be a concern early on, taking advantage of freight factoring services can be a great way to not only purchase fuel, but also ensure equipment can be repaired in a timely manner that allows you to stay on the road and meet your commitments.
No Long-Term Contracts
When using freight factoring services, there are no long-term contracts to be signed. Instead, you simply decide which invoices you want to sell to the company and when you want to do so. As a result, you can keep far greater control over many of the most important financial aspects of your business, giving you the flexibility needed to make decisions on equipment purchases, facility expansion, hiring of new drivers, or perhaps equipment upgrades or repairs.
Virtually Unlimited Credit Lines
Whether you have a small trucking company, are an independent owner-operator, or are in charge of a large trucking corporation, freight factoring allows you to grow your business at your own pace. Once you have used a freight factoring company and have established yourself as a good customer, you will have a virtually unlimited line of credit that can be used for various purposes. Thus, rather than waiting weeks and weeks for an answer on a loan application, you can use freight factoring services to quickly begin putting your plans into action.
No matter your business needs, freight factoring is an option that more and more truckers and trucking companies are using on a daily basis. Whether it is to always have money available for fuel or other expenses, freight factoring is the perfect choice.