How Financing Can Help Make a Successful Trucking Company

You must consider a number of things if you want to operate a successful trucking company. Most new transportation companies grow by seeking as many loads as possible. However, finding loads is only one piece of the puzzle. Running your trucks and delivering loads are just as important and are often more complex.

To do all of this this successfully, you need good cash flow.

Most companies initially overlook their cash flow, focusing instead on hauling loads. But without good cash flow, you won’t be able to run your trucks, pay your drivers, buy fuel, and cover the other ongoing expenses. Managing your cash flow is one of the most important tasks of owning a business. Unfortunately, many company owners ignore their cash flow until it’s too late.

The main source of cash flow problems

From a cash flow perspective, there are two types of commercial clients: those who pay quickly and those who don’t offer quick-pays. Working with carriers that offer quick-pays is great for your cash flow. Money flows in quickly, enabling you to pay for expenses without having to use your cash reserves. However, quick-pays are not always reliable. Shippers can start paying slowly at any time.

Actually, most shippers prefer to pay on terms. They ask for 30, 45, or 60 days to pay an invoice. These terms are a common business practice and most carriers and brokers don’t have much of a choice. You can either offer terms or lose the prospect. However, many carriers can’t afford to offer terms – at least, not for long. They need money to pay for repairs, drivers, fuel, and other expenses.

Offering terms when you can’t afford to is one of the main causes of cash flow problems. And fixing this problem is one of the most important keys to your success as a trucking company owner.

Fixing your cash flow is critical

One simple way to fix your cash flow is to finance your freight receivables. Freight factoring works by partnering your company with a funding company that finances your invoices from creditworthy clients who pay in 30 to 60 days – providing you with immediate funds that can be used to pay expenses. For detailed information on the solution, read “What is freight factoring?

Financing your growth

If you have been unable to grow your company because your clients demand payment terms, this solution can help. It enables you to work with clients who pay slowly because you can always finance a receivable if you need money. Furthermore, the line can adapt to your business and grow as your revenues increase.

Freight factoring can be a perfect solution for carriers that need funding to support their sales and become successful.

Selecting clients with good payment histories

One of the key aspects of growing a carrier is working with clients who pay invoices reliably. Avoiding clients who don’t pay (increasing your bad debt) is critical. Many factoring companies offer credit management services and help you financially assess your clients. These services help improve the creditworthiness of your invoice portfolio and decrease your chances of incurring bad debt.

Easy to get – even for small carriers

One important advantage of freight factoring is that it’s easier to get than most other solutions. Obviously, you need good invoices since they are the collateral being financed. Additionally, your invoices must be free of encumbrances, and your company should not have serious tax or legal issues. As you can see, these requirements are fairly easy to meet – even for small transportation carriers and owner operators.

As a result, freight factoring is an ideal alternative for growing trucking companies that have cash flow problems due to slow-paying clients. Freight factoring provides critical financial support that is key to “driving” your success.

Get a quote

Are you looking for a freight bill factoring quote? We are a leading factoring company in Canada and can provide you with competitive terms. For information, get an online quote or call (877) 300 3258.