Factoring Financing: The Ideal Solution For Trucking Companies
Factoring financing provides
a nearly instant, reliable source of
business capital for any trucking company by eliminating the typical 30
to 60 day delay in getting paid for freight bill invoices.
In the lucrative freight and logistics industry, cash flow is a nagging
problem. And this is particularly true for trucking companies, which
often find themselves in need of cash to pay drivers and equipment and
fuel expenses before they are paid for jobs. While many freight
customers wait 30, 60, sometimes up to 90 days to pay their bills, a
trucking company does not have the option to defer payroll or repair
broken equipment for months at a time.
Without a significant cushion of cash or access to a business line of
credit, this situation can spell ruin for even the most profitable
You Having Trouble Meeting Expenses?
factoring program can help you with:
including drivers and office personnel that keep the
company moving smoothly and marketing for new business.
which is costly for these high-risk companies and is often
due monthly, regardless of whether an invoice has been paid.
which smart trucking companies never purchase on credit, in order
to keep costs manageable.
registration, huge expenses when acquiring new
to drivers who have on-the-road (OTR) expenses or training
Today’s tough small business financing climate makes getting a loan or
business line of credit from a bank a challenging proposition
best. However, there is an alternative that is growing in popularity: a
factoring financing line.
For a busy trucking company, there is simply no better and easier to
qualify for small business financing available that can quickly and
permanently stabilize cash flow and eliminate the constant stress of
not knowing when its trucking invoices will be paid.
How Does Factoring For Trucking
think about factoring
until you've read this ...
It could save you many thousands of dollars and a lot of aggravation!
A factoring financing line provides cash for trucking invoices, often
on the same day, or at most within a day or two from the time they are
generated. Every day throughout the world, factoring companies purchase
trucking invoices for a small fee and immediately advance up to 97% of
the invoiced amount electronically to their freight company clients’
bank accounts. These funds are then immediately available to pay
drivers, make necessary repairs to equipment and keep up with fuel
A factoring program is very different than a business line of credit or
loan. Selling trucking invoices requires no complicated applications,
no debt and no monthly payments. As the business grows, the amount of
financing available from the factoring financing line increases
automatically, making factoring financing the most flexible form of
business financing available anywhere.
But Powerful Business Financing
A factoring financing line is simple to use. Here
is how a typical
transaction would work:
- You deliver the load and issue a freight bill
- You sell the freight bill to the factoring company, who
pays you a
first installment of from 90% to 97% of the freight bill
- You use the money while your factoring company waits for
the invoice to
- Once the factoring company gets paid, any remaining
reserves (less a
small fee) are returned as your second installment and the transaction
Although it is common for factoring companies to hold back a reserve –
the difference between the amount invoiced and the amount advanced to
the freight company or trucking broker – to protect against collection
losses, some now offer full advances (no reserve) to their best clients.
What Are The Qualifications For
Factoring Financing Line?
Most small and mid size trucking and transportation companies should
easily qualify for a factoring program. There are two main requirements
- Your company must do business with reputable clients or
- Your company must be free of tax problems.
If you meet these two criteria, more often than not you will qualify.
Even if your company has some minor tax issues, some factoring
companies will help you work around them. A good factoring consultant
can quickly analyze your circumstances and recommend the best solution
for your situation.
Most invoice factoring companies are comfortable working with new
businesses, so you should be able to qualify even if your company is a
small business start up. Best of all, you can get a financing agreement
in place within a few days.
How Much Does It Cost?
The cost of factoring financing can vary from 1.5% to 3.5% per month,
- The creditworthiness of your client or trucking broker
- The terms of the invoices and
- The volume of trucking invoices you factor. (Generally,
are factored at lower rates.)
As is the case with “no reserve” policies, some factoring companies are
now offering their best clients flat factoring financing rates to
attract and retain clients.
Modest Cost For Some Big Benefits
Get Some Extras!
Some trucking factoring companies offer "goodies" to win
* Same day FastPay fundings available
* No minimum fees or volume requirements - use your factoring
much or little as you want
* Free 24/7 online account access and credit database
* Discounts with Prepass, FedEx, Trippak, and
* Free one-year ATA membership
* Branded fuel cards offering cash price plus fuel discounts
Although the main benefit of factoring financing is the reliable source
of business capital and predictable cash flow it provides, most
factoring companies also provide their clients with collections and
credit protection as part of their service. This enables you to focus
your attention and staff resources on growing your company rather than
on expensive and time-consuming back office tasks.
Since the amount of available factoring financing grows automatically
with your company, you will have ample business capital to purchase new
equipment, hire additional drivers, and pay suppliers when acquiring
Most factoring companies buy invoices using a non-recourse factoring.
With a non-recourse agreement, the factoring company bears the risk of
nonpayment if your client becomes insolvent or goes out of business.
Credit insurance and the increased peace of mind it provides is another
excellent factoring program benefit and one that can allow you to
pursue new business virtually worry free.
So, while allowing your company to reduce expenses and wasted energy on
the collection and bookkeeping, factoring financing will simultaneously
boost your growth and profit potential – all without the hassles, rigid
rules, documentation requirements and the debt burden associated with
traditional small business financing from banks.
Whether your company is new or well established
your firm does not have to be a financial challenge. A factoring
financing line is an ideal, cost effective solution that can help you
finance your way to success.