Thousands of trucks deliver tons of freight across the U.S. every day. If you are the owner of one of these American trucking companies, you know that vehicles in your fleet will sometimes encounter problems on the road and will require immediate maintenance. Also, fuel and oil changes can add to this expense. On top of all of this, drivers need to be paid, and their benefits packages don't come for free either.
If an entire fleet suddenly requires maintenance, or a great number of drivers suddenly need to be hired, trucking companies can often face huge expenses - bills that sometimes exceed their current cash on hand.
This is why so many truck company owners in the U.S. rely on transportation factoring to help them with unexpected costs. Being the independent owner of a small or medium-sized commercial truck means facing small profit margins. It can be tough to make money when you are required to pay for so man expenses, and it is getting tougher given the rising costs surrounding trucking. Understanding your business costs can help you manage these costs, but a financing option that helps generate upfront funding the moment you need it can also be a major boon.
Transportation factoring is not a loan, which means applying doesn't carry with it the worry that you won't pass a credit check or that you'll need to jump through other hoops typically put in place by banks and other traditional lenders. Factoring is based on the credit worthiness of customers you work for, so if they have a good payment record you're nearly assured of qualifying.
If you've ever needed a source of upfront funding to help you cover unexpected costs or to help you cover growth expenses the benefits of transportation factoring may be exactly what you need to take your company to the next level.
Here's how transportation factoring works:
Step 1. Deliver your load as normal, and then send a copy of your customer invoice to your factoring partner. The information contained in these documents should include the load, the rate confirmation, as well as any other pertinent details.
Step 2. If that customer has been approved, you will be provided an advance on the value of the invoice. Certain factoring companies such as Accutrac Capital will advance up to 97% of the original invoice's value, holding the other 3% in reserve. Approval can take as little as 48 hours, and many partners offer same-day factoring services.
Step 4. The factor will then collect the invoice value from the customer on your behalf, freeing your time and energy for other endeavors.
Step 5. Once the factor collects on the value of the invoice from the customer, the 3% is remitted to you, the carrier.
Trucking fleets of all sizes and stripes use transportation factoring as a way to free up cash flow when it's needed. Factoring benefits trucking company owners through upfront cash advances, AR management through billing services, as well as other back office assistance through collection on the original invoices. This combined with value-added services such as fuel discount cards and equipment financing, makes transportation factoring a useful tool to help trucking company owners maintain positive cash flow and grow their businesses.
* This is a contributed article and this content does not necessarily represent the views of realtytoday.com
