With a number of regulations easing in the trucking industry, owners of freight and transportation companies are more concerned than ever with keeping positive cash flow and staying in the black in order to capitalize on growth opportunities. On top of overhead costs including wages, benefits, as well as fleet maintenance and fuel needs, trucking owners need sound funding options to facilitate expansion and growth initiatives. If you’re wondering why so many freight and transportation company owners are turning to factoring for their cash flow needs, here are some of the main reasons this type of financing is so popular.
- Factoring eliminates waiting periods
One of the most challenging hurdles of running a trucking company is waiting to collect on invoices for deliveries you’ve already made. Sometimes clients will wait to pay for 30, 60, or even 90 days, but you have bills to pay now. Factoring your freight invoices with a factoring company such as Accutrac Capital allows you to effectively sell your invoices at a discount and receive the money you need right away — often in the same day you factor the invoice.
- Factoring helps improve cash flow
If funds are low, or you simply don’t have the cash on hand necessary to seize a growth opportunity, you’ll be happy to know that factoring allows you to streamline your cash flow. An unpaid invoice is no good to anybody, but factoring allows you to turn that unpaid invoice into cash on hand for a small one-time factoring fee.
Moving freight is the lifeblood of your company and the more you move, the more money you can earn. With cash on hand from transportation factoring, you can seize opportunities to expand your existing fleet or upgrade one or more of your trucks.
- Factoring lets you avoid collections
Another major advantage of freight factoring is that you no longer have to worry about collections. The factoring company you partner with will handle collections on your behalf, giving you the peace of mind — and the necessary free time — to focus on the more important aspects of your company like driver training and fleet safety.
- Factoring is not a loan
Because factoring is not aloan, there is no interest accruing on the amount that you are funded. You are not borrowing money, but rather you are selling your invoices at a discount. When you sell an invoice to the factoring company, they will often give you a significant percentage of the value upfront (Accutrac offers 97% of the value of the invoice minus a nominal factoring fee). Once the factoring company collects the invoice on your behalf they return the other 3% that was held in reserve. It’s that simple.
- No hidden fees
When you deal with a reliable factoring company, you know that they will not charge you any hidden fees or additional costs. And when you deal with a factoring company that deals exclusively with trucking company owners, they understand the business and can offer a transparent set of factoring plans tailored to the needs of your business.