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Article: Does Your Trucking Company Have Cash Flow Issues?

Is your trucking company is stuck in neutral – not going anywhere? Are you plagued with cash flow problems because commercial clients and shippers pay in up to 60 days? If you have lots of slow-paying freight bills and not a lot of cash in your business bank account, we may be able to help you.

Having slow-paying clients is one of the worst problems that a trucking carrier or freight broker can have – especially for a cash-hungry trucking company that needs money to pay for drivers, repairs, fuel, and equipment. For many transportation professionals, the biggest cash flow issue comes from slow-paying shippers, who can take up to 60 days to pay freight bills because they don’t offer transportation quick-pays.

Is a loan the right solution?

If you are like most transportation owners, your first reaction to this problem is to try to secure a loan from a bank or a lending institution. However, a conventional business loan (which is difficult to get) only cures the temporary problem.

Loans are fixed in value. What happens in four months when the loan money has run out? You will be left exactly where you are standing now: back to square one.

A better option: freight bill factoring

A better solution is to eliminate slow payments altogether. Note that we did not say that we should eliminate the slow-paying clients – just their slow payments. Ask yourself this hypothetical question: how would your company operate if all your freight bills were paid in two days instead of 30 or 60? How many more freight loads would you be willing – and able – to take?

You can accomplish this goal without actually asking your clients to pay sooner. The solution is to finance your freight bills using freight factoring – one of the best financing tools for new and growing transportation companies that have cash flow problems.

It eliminates the guesswork of trying to determine when shippers will pay and provides predictable revenues. By financing freight bills, you get access to immediate funding that you can use to pay important company expenses. And this financing line grows as your revenues increase.

Most transactions are funded in two installments. The first installment covers 90% of the invoice and is provided as soon as the load is delivered and your client accepts the invoice. The remaining 10% is held in reserve to cover charge backs, and it’s rebated (less financing fees) as soon as your client pays in full. Fore more information, please read “What is freight factoring?

How will freight factoring help your company?

The simple answer is that your cash flow improves. Instead of trying to juggle payments and hoping for quick collections, you can offer terms to shippers that do not offer quick pays. When used correctly, this tool helps you grow your company. And since factoring companies finance clients based on the strength of your invoices, we can help you determine the creditworthiness of your clients, thereby minimizing bad debt problems.

Can you qualify?

Qualifying for this transportation financing solution is usually easy. The main requirement is to have freight bills from good, creditworthy commercial clients and shippers. Aside from that, your transportation company needs to be well run, have lien-free invoices, and show promise of success. It is a cost effective solution that can help you drive your freight company to the next level.

Would you like a factoring quote?

We are a leading freight bill factoring company and can provide you with high advances at low rates. For more information, get an online quote or call us at (877) 300 3258.

Return to the Freight Bill Factoring Resource Center.