Growing companies in the trucking industry need consistent cash flow in order to meet their operational needs, take on new business, invest in new equipment, and make important repairs to keep their fleet on the road. Anyone who runs a trucking business knows that slow paying customers or customers with extended terms are one of the reasons why keeping positive cash flow can be a challenge. This is why a truck factoring company can eliminate cash flow freezes and improve overall business.
Freight factoring — also known as transport factoring — refers to the process of selling customer accounts receivable to a third-party factoring company at a discount. This type of factoring for trucking companies helps carriers keep a steady amount of cash on hand to reinvest in their business.Different from a bank loan, which carries with it a hefty interest rate, invoice factoring is a one-time financial transactionthat involves selling accounts receivable invoices for cash upfront.
Unlike banks, which actually profit from nonpayment of loans, a third-party factoring company like Accutrac Capital wants to see your trucking business succeed, because the more you grow your business, the more invoices you can continue to factor. Transportation factoring is a tool particularly well-suited to the transportation and trucking industry because the cash on hand it provides allows carriers to take on larger loads or contracts with slower paying customers. And of course, when slow paying customers or customers with extended terms no longer affect cash flow negatively, carriers are more eager to bring them on.
Trucking companies who regularly factor their invoices have instant access to the working capital they need — money that might otherwise be locked down for weeks or even months while waiting for customers to pay. Furthermore, factoring gives you the ability to attract potential customers, as it allows you to leverage and negotiate with suppliers and vendors. With valuable working capital on hand (instead of locked down as an unpaid invoice), you are able to negotiate more favourable terms, as well. In a nutshell, transportation factoring means improved probability for your trucking business overall.
Working with a reputable factoring company such as Accutrac Capital means access to favorable terms such as:
- Some of the most competitive transportation factoring fees in the industry
- Favorable advance rates up to 97%
- Zero application or due diligence fees
- Available same day funding
- Free AR management, as factoring companies collect unpaid invoices on your behalf
- Free risk management in the form of credit checks to vet prospective new customers and set limits
- Factoring for trucking companies comes with considerable perks including fleet fuel cards
Freight factoring is a mainstream financial tactic that can help carriers with cash flow problems. For many carrier fleets, the costs of daily operations can really add up. Because many fleets can’t afford to wait three months to receive payment on deliveries already made, more and more owners are relying on invoice factoring to bolster their available cash on hand. By working with a reliable factoring company, fleets can get money upfront and continue operations without a hitch.