Freight bill factoring can help freight and trucking companies to manage the intensive cash expenditures of their day-to-day operations.
The nature of the transport industry is such that customers pay for services rendered only after they have received the goods. Oftentimes, the customer will take weeks or even months to address the invoice and pay the balance owing. In many cases, this causes stress on cash flow management that can hinder operational efficiency. Trucking companies that are affected by these factors can benefit enormously from receiving advance funding on account receivables.
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What Is Freight Bill Factoring?
Freight bill factoring is one of the easiest, most reliable, and cost-effective ways to manage cash flow for your trucking or freight company. Factoring is the practice of selling account receivables at a discount in exchange for immediate funds. A freight bill factoring company will effectively buy your invoices for freight that you’ve already delivered. They then collect the money when your customer pays the invoice, and they retain a small fee from you in exchange.
Large fleets and established freight companies with deep pockets may have the financial resources to better manage cash flow issues. However, smaller operations and growing businesses often encounter up-front expenses without adequate funds to make payment when due. These operating expenses often include:
- cash for fuel
- fleet repairs
- tire purchases
- rental/loan payments
- driver payments
- myriad other maintenance and overhead expenses
Freight Bill Factoring Stabilizes Cash Flow
While your company might have to wait 30, 60 or 90 days to close out an invoice, you still need to pay your expenses daily.
This creates a funding problem for transportation, mail carrier, and haulage companies, which can be extremely difficult to overcome without improved and stable cash flow. Financing from large banks or financial institutions is invariably not an option for trucking companies. That’s mainly because conventional lenders consider the transportation industry to be volatile and therefore high risk.
Further, since new carriers or freight companies are seldom able to demonstrate profitability or show proof of their past performance, they fail to qualify for commercial operating lines of credit.
This is why many trucking companies are looking to factoring their bills as a cash-flow solution. If your freight business is growing and your clients are credit-worthy, a freight bill factoring company such as Accutrac Capital will buy your outstanding invoices for as little as 1.59% in fees.
Convert Your Receivables into Cash
With freight bill factoring, you can convert your slow receivables into cash, which will provide you with a convenient and flexible financing line, which is itself directly related to your ongoing sales. This means that the more you invoice to reputable clients, the more funding will be available to you.
Factoring your freight bills is a fairly simple process. Once you establish an agreement with an invoice financing company, they can arrange services to fit your needs. Accutrac Capital, for example, offers one-time flat-fee factoring starting from 1.59%. They also have a factoring line of credit designed for larger operations. In addition, they provide flex factoring for trucking companies that expect faster turnaround on their invoices.
If your growing trucking company requires a bit of leeway while you’re waiting for invoices to be paid, consider freight bill factoring. Further, think of factoring as a regular extension of your accounts receivable process. With freight bill factoring you’ll have access to improved, flexible, and dependable cash flow solutions.