Whatever the size or credit score of your trucking company, it is often difficult to maintain positive cash flow and keep your AR management running smoothly. Any trucking owner will tell you that access to working capital is the key to staying solvent.
Luckily, there are flexible financing options to help trucking companies of any size control their costs while gaining access to convenient funding, without the challenges involved in traditional bank loans. Freight factoring is one such option that remains popular among carriers of all sizes and scope. Because freight factoring is not a loan, you can turn freight bills into immediate cash without accruing new debt from a financial institution.
Top US freight factoring companies offer funding to trucking companies nationwide, and qualification is easy even if your company is just starting or if you have a history of credit trouble. Freight factoring companies make their decisions of whether to fund carriers based on the credit rating of the customers and not the carrier itself. As long as you work with established, reliable shippers, you have a high chance of being approved for freight factoring.
Freight factoring is a financial interaction that allows carriers to sell their accounts receivable to a third-party factoring companies for immediate funding. By choosing a factoring company that specializes in trucking, you will be working with a partner and a plan designed specifically to meet the demands of your difficult industry. The transaction works as follows:
- Your trucking company delivers its freight as per usual
- You send an invoice to your customer and a copy to the factoring partner along with delivery documentation
- The factoring company provides a cash advance of up to 97% (less a small factoring fee that differs depending on your plan)
When the customer pays the full amount owing, the factoring company reimburses you the remaining 3% balance owing
As with any transaction, you want to deal only with the most reliable partners. If the company is not upfront with its pricing plans and fees, it is likely to their advantage and not to yours. Beware also of any hidden fees that might not immediately present themselves. When you choose your factoring partner keep the above in mind. As no two carriers are the same, also be sure to find a factoring company that specializes in trucking and who has multiple plans on offer. Accutrac Capital can help improve cash flow and ensure working capital for your trucking company through a number of transparent plans. Consider flat fee factoring, providing same day funding with rates starting from just 1.59% of the value of the invoice. You might also consider flex factoring, designed for invoices that usually turn around within 10 days and offer a generous 0.49% fee. For larger operations, a factoring line of credit is often preferred, at a cost of as little as 0.022% per day.
Whatever your needs, a professional and reliable freight factoring partner can help you manage your AR and free up funding so you can concentrate on building a better trucking business.