Trucking companies often find themselves waiting anywhere between 30 and 90 days to collect payment on their invoices. When each invoice can be valued at over a thousand dollars, finding a way to support growth while maintaining cash flow becomes one of the industry’s largest hurdles. What’s more is that trucking businesses face limited financing options, especially if they’re start ups and ineligible to receive loans through traditional avenues.
Before a bank lends their money for example, they must be satisfied with a company’s credit score, which can take time to generate, especially for small or start up enterprises. To alleviate the financial burden created by outstanding invoices, freight enterprises turn to what is known as invoice factoring (a particular form of invoice financing). Factoring companies like Accutrac Capital purchase the invoices off their trucking clients for a small factoring fee; they then go after the customers themselves to cover the outstanding payment. Their client receives the majority of the payment upfront and the remainder is returned to them once the customers pay in full. This way, freight services can pay their motor carriers, can meet overhead needs, and cover bills in a timely fashion.
For larger fleets, clients can choose a factoring line of credit which provides maximum value (some companies offer the low cost of 0.022% per day). Alternatively, if a trucking company trusts their customers to pay what is owed in under 10 days, flex factoring costs only a third of the flat factoring fee. This is a good option for a client with dependable customers that nevertheless requires money immediately.
Should a trucking company be turned down by traditional lenders due to lack of collateral or poor credit history, factoring can be set up right away. The process isn’t as complex because well-established factoring companies recognize that an advance is not the same as a loan.
If your company is hindered by waiting up to three months for returns and you would rather spend your time focusing on revenue-building initiatives, consider the ease and convenience of freight bill factoring to maintain cash flow. A strong factoring entity will also help you with your A/R management, allowing for fast and easy credit appraisals of current and potential clients. Consider a factoring service that understands trucking and that offers the lowest rates in the industry as well as additional services such as A/R management and fuel discount card incentives. Accutrac Capital offers invoice factoring services to:
- Start up operations
- High-growth companies who need additional working capital
- Businesses in transition or going through a change of ownership
- Companies going through a tough year
The time it takes for customers to pay their invoices can put great financial pressure on small to medium sized trucking enterprises. Thankfully, invoice financing provides peace of mind and comes with virtually zero risk. Within a day or two of submitting the necessary paperwork, trucking companies receive payment. If you’re a freight service provider struggling with cash flow, factoring can finally provide your enterprise with the flexibility to grow.