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Article: Trucking Freight? How To Get Loads of Financing!

As a transportation company owner, you are probably acutely aware that freight companies are very demanding when it comes to their cash flow. You need access to funds to be able to meet all the company’s expenses, which are never-ending.

As long as clients pay promptly, your company can operate like a well-oiled machine. But if there is a hiccup in the revenue process, or if clients delay payments, the well-oiled machine starts squeaking. And if there is a major payment delay, gears can start flying all over the place and the “well-oiled machine” grinds to a halt. That is what happens when your cash flow fails, and it’s never nice.

It’s all about cash flow

Running a successful transportation company – carrier or brokerage – is all about finding loads and delivering them on time – while finding the money to run the business and grow it. Many transportation businesses have strong profits but very weak cash flows. This problem can be serious, and it all boils down to the fact that many commercial shippers take up to two months to pay freight bills. Waiting that long for payment can be very difficult for small companies since they have plenty of expenses to pay.

The bank won’t help

Unfortunately, trying to get bank financing won’t help. Aside from the fact that many institutional lenders are leery of transportation companies, they also have stringent qualification requirements. They will finance a trucking company only if the owner has substantial collateral, if the company can show years of profitable financial statements, and if they have a seasoned management team. As you can imagine, few small trucking company owners can meet those requirements.

Solve your cash flow issue and you solve your problem

The simple solution to this challenge is to solve the cash flow problem. If your clients paid quickly, you probably would not have a problem, right? Actually, if they paid in days, instead of months, you probably could grow your business quickly and effectively. You can actually accomplish this without asking your clients to pay sooner.

The way to solve this problem is to use transportation factoring. The concept behind this solution is very simple. Factoring companies provide you with cash for your freight bills – usually in one business day. You get immediate funding while the finance company waits to get paid. With this solution in place, you get immediate money for your slow-paying freight bills, which allows you to pay drivers, maintain power units, and buy fuel. The transaction itself is fairly simple and is done in two payments:

  1. You deliver the load and submit copies of the documents to the factoring company
  2. The finance advances you about 90% of the freight bill in one business day
  3. Once your client pays, you get the remaining 10% (less fees)

Easy to get. Quick to deploy

Transportation factoring is easy to qualify for and is commonly used in the trucking industry. Most trucking companies can easily qualify since the main requirement is that they do business with commercial clients who pay reliably, albeit slowly. Aside from that, your receivables must be clear of liens and legal/tax problems.

One important advantage of invoice factoring is that it can be deployed very quickly – usually in days. This advantage is important for transportation company owners who find themselves in a tough financial position and need a quick solution.

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.


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