Factoring is a financial tool trucking companies can use to strengthen operations and grow faster. Here are five ways invoice factoring for trucking companies speeds up growth.
Factoring for Trucking Companies Fuels Growth in 5 Ways
We have yet to work with a freight factoring client that did not want their business to grow. Invoice factoring is one of the tools that is particularly well-suited to the trucking industry, especially for those that want to add more trucks to their fleet, take on new business more quickly or attract the attention of larger shipping clients. If you will forgive the pun, the one thing we have found to be true about all of our freight factoring clients is that they are on the move. Here are five ways invoice factoring for trucking companies speeds up growth.
5 Benefits of Factoring for Trucking Companies
1. Freight Factoring for Trucking Companies Eliminates Cash Flow Slow-Down
Growing companies need consistent cash flow to meet operational needs, take on new business, make needed repairs or invest in new equipment. Our clients commonly cite slow-paying customers or customers with extended terms as one of the reasons that freight factoring is beneficial to their trucking business.
2. Factoring Invoices Facilitates Competitive Advantages
By extension, getting payment on customer invoices within days (or hours) or when they are issued – without waiting for customers to pay – can create an instant competitive advantage for a trucking company. Since slow-paying freight customers or customers with extended terms no longer affects their cash flow, they can extend better payment terms that can help them bring on new accounts.
3. Factoring Freight Bills Frees Up Working Capital
No business can grow without access to working capital. If working capital is locked down in customer receivables, it cannot be put to work to pay operating expenses, meet payroll, cover the cost of taking on new business or be put to work to add new trucks to the fleet. Lack of cash flow can stall your growth; access to working capital lets you reinvest in your business more quickly!
Trucking companies that factor invoices get almost immediate access to the working capital that could otherwise be locked down for weeks – or even months – while waiting for customers to pay. You can calculate how much working capital may be tied up in your receivable invoices using our freight factoring calculator.
4. Factoring Invoices Provides a Trucking Company with Financial Leverage
Not only does factoring freight bills give you the ability to become more attractive to potential customers, it also gives you leverage with suppliers and vendors. With working capital in hand – instead of locked down in customer receivables – you can negotiate more favorable terms and savings.
This type of cost savings means improved profitability for your trucking business. The amount you save with vendor quick-pay discounts could even be far more than the factoring fees needed to speed up cash flow.
5. Factoring Freight Bills Reduces Operational Costs
Saving money with vendors and suppliers is only one way that factoring produces a cost-savings for a trucking company. In addition, operational costs associated with bookkeeping for accounts receivables and any associated collections activities are reduced – or even eliminated altogether.
In addition, trucking companies that factor without recourse (non-recourse factoring) can also reduce or eliminate their risk from bad debt, since the factoring company assumes the credit risk.
Freight Factoring Companies that Put You Driver’s Seat
Freight factoring (or invoice factoring) refers to the act of selling freight bills and/or customer receivable invoices to a factoring company. Using factoring for trucking companies means the carrier does not have to wait for customers to pay. They can make instant reinvestments that allow them to get back on the road and take on new business, add trucks or leverage their availability and reputation to serve bigger freight accounts.
Every factoring program is a little bit different. Our goal is to provide freight factoring services tailored to the unique needs of your business. We want you to be able to retain more control and eliminate any unpleasant surprises. Our factoring agreements include favorable terms like:
- Low freight factoring fees
- Competitive advances
- No long-term contracts
- No monthly minimums – factor only when it’s right for your trucking business!
- Small invoices welcome – factoring for trucking fleets of all sizes!
- Spot factoring and micro-factoring
- Fast funding options
- Credit checks to vet new customers and set limits
- No application or due diligence fees
- No hidden administrative fees to drive up the cost of factoring
- Professional customer service with an assigned account manager
- Non-recourse factoring for additional financial protection
- Non-notification white-labeled factoring options
It’s free and easy to apply to see if freight factoring makes financial sense for your trucking business. Complete an application or request a quick quote and you could go from approval to funding in a matter of hours.