Shippers Won’t Offer Quick Pays? What To Do About It

Most transportation companies – freight carriers and brokers alike – benefit from working with shippers that offer quick pays. As the name implies, a quick pay is an invoice that is paid quickly by the shipper.

Most customers that offer quick pays do so in order to get a discount or similar benefit. And the transportation company enjoys the important benefit of getting quick liquidity that can be used to cover critical business expenses.

If all shippers paid quickly, it would eliminate one of the major headaches of owning a transportation company: managing tight cash flow.

Slow payments and cash flow problems

Why do revenues come in slowly? Most carriers and brokers have agreements with their shippers that allow them to pay their invoices in 30 to 60 days. Customers ask for trade credit for a very simple reason: it improves their cash flow. They get to use your services for a month or two before having to pay.

The problem is that they do so at your expense. And if your company does not have the necessary resources to operate while waiting for payment, you may run into serious problems.

Improving your working capital

One way to handle customers that won’t offer quick pays is to finance their invoices. If your shipper has good commercial credit, you can work with a company that will finance your invoices and settle with you when they get paid. This strategy gives you immediate access to working capital that can be used to operate your business and to take on new opportunities.

An advantage of trucking factoring, as the solution is called, over conventional products is that it’s available to small carriers. The qualification requirements are not as difficult as those associated with a business loan or line of credit.

Most factoring companies require that your shippers/customers have good commercial credit because they are financing those customers’ invoices. The factoring company also requires that your company be in good standing and that your invoices be free of liens. Most small carriers can usually meet these requirements.

Flexible cash flow

Trucking factoring also offers more flexibility than most conventional solutions. The credit line can be used by fast-growing trucking companies that have immediate working capital requirements. The facility can increase as the size of the invoices and the number of customers increases.

Often, these facility increases can be done automatically without requiring substantial underwriting — making receivables financing an important alternative for transportation carriers and freight brokers faced with shippers that do not offer quick pays.

Get a quote

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