A trucking business can help you generate money, but you have to invest a good deal of money in the business first. The financing needs of such firms vary significantly. One of the best ways to finance your trucking company is to make use of use freight factoring.
Responsibilities of a Trucking Company Owner
Most of the trucking owners (or any other transportation company for that matter) have to juggle responsibilities on a constant basis, including driver payments, office expenditures, vehicle repairs, fuel costs, insurance payments, and more.
Due to these financial responsibilities, they would more often face cash flow rut and the only way to get out of this problem is to discover a solution to capitalize on the slow paying bills. The best means for a trucking company to achieve this is freight bill factoring.
Benefits of Freight Factoring
Freight bill funding helps a trucking firm to get the payment for their freight invoices within one day of billing, eradicating the normal waiting period of 30 to 60 days. With the right factoring agreement, it is possible to stabilize the cash flow of the company and get rid of the constant worry of not knowing when you would be paid.
This way, you can focus on managing and handling your business since freight invoice factoring eradicates the stress of waiting to receive your payment.
How Does It Work?
Here’s how freight invoice factoring works in a nutshell –
>> You deliver the invoice and freight to your customer
>> Then, send a freight invoice company to the factoring company
>> Here onwards, the factoring firm advanced you up till 90% of your bill, while the remaining 10% is held in reserve
>> When the factoring company receives the payment, they refund the remaining 10-percent of their fee.
Difference between Factoring and Bank Loans
Factoring is not like bank loans, as factoring has no caps on the maximum limit. It is possible to factor as much freight invoices as you can produce. Thus, your financing also grows along with your company. Factoring is a great means to finance the growing trucking firms that require money to grow. It lets you try out new opportunities in order to take your firm to the next level.
Trucking company owners need to be aware of the fact that not all trucking companies qualify for freight factoring. However, most of the small sized and mid sized ones are eligible for it. The two main requirements that are needed in order to qualify are that your firm should have transactions with reputed clients or freight brokers and there shouldn’t be any tax issues associated with your firm. If your company satisfies these two conditions, you will be eligible for freight factoring. There are many truck factoring companies, like Pay4Freight that will help owners achieve their objectives.
The main advantage of working with a freight factoring service provider is that it will give you advanced finances on your freight invoices. That implies you can receive the payments at the earliest after billing. Most factors will also give you credit protection and collections as a part of their services.
During the initial stages, many trucking company owners avail factoring to deal with the problem of slow payers, but eventually they do realize that it helps in growing their business.