Freight Factoring for Trucking Companies
Trucking companies are one of the most cash hungry businesses in the transportation industry. There are driver expenses, equipment expenses and fuel expenses. However, trucking companies can also be very profitable, if cash flow is managed properly.
One of the main challenges that trucking company owners face is that freight bills can take as long as 60 days to get paid. This puts them in a tough spot, because unless the company has a significant amount of cash in the bank, it usually cannot afford to wait to get paid.
Usually, the owner will try to go to the bank to obtain financing hoping that a loan or line of credit might solve the problem. Unfortunately, banks will seldom finance businesses that have less than three years of audited financials that show consistent profits. Of course, if the trucking company could provide three years of financials that show profits, it would not need financing.
A better solution is to use freight factoring. Freight bill factoring enables you to convert your slow paying freight bills into cash by selling them to a factoring company. This provides you with immediate financing and allows you to cover all your ongoing business expenses. Also, as opposed to a business loan, freight bill factoring automatically grows as your sales grow, providing you with flexible business financing.
Want an instant freight factoring quote? Get an online quote now! Questions? Call (866) 730 1922. Services in the USA and in Canada.
Factoring rates as low as 1.50%.
Click here to get funded now! (subject to monthly volume).
The process is simple. The factoring company buys your invoices and pays for them up front. The transaction is typically done in two installments. The first installment is called the advance and the invoice factoring company provides you with up to 90% of the invoiced amount. The remaining 10% is held as a reserve to cover disputes or charge backs. The remaining 10% (less a fee) is rebated as a second installment, once the invoice is actually paid.
The factoring fee is based on how long the invoice is factored for and the monthly volume of factored invoices. Discount rates average between 1.5% and 4% per month based on these parameters.
Most factoring companies buy invoices using a non-recourse invoice factoring. Under a non-recourse agreement, the factoring company bears the risk of nonpayment if your client becomes insolvent or goes out of business. This is a nice benefit of factoring and increases the peace of mind of business owners.
Freight bill factoring is an ideal solution for a new and emerging trucking company, and provides you with the necessary financing to operate and grow your business.
Want an instant freight bill factoring quote? Get an online quote now! Questions? Call (866) 730 1922. Services in the USA and in Canada.
Factoring rates as low as 1.50%.
Click here to get funded now! (subject to monthly volume).
Need more information? Go to the freight bill factoring resource center or to the main freight bill factoring page.
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