For carriers looking for an edge in how they manage their finances in 2019, one tactic that has been growing in popularity is freight bill factoring. Freight factoring involves selling accounts receivable at a discount to a factoring company in exchange for an immediate cash advance on unpaid invoices. The freight factoring company you sell the invoices to is now responsible for collecting on the invoice on your behalf, thereby unburdening you of certain AR responsibilities — and allowing you to grow your business.
Not only does freight factoring allows trucking companies access to funding when they need it, but it also helps improve cash flow for basic overhead costs. On top of that, they also offer other value-added incentives such as risk mitigation through unlimited credit checks on present and prospective customers.
Why Should You Factor Freight Bills?
Factoring is a great financing alternative for small startup trucking companies, medium to larger fleets, as well as local and long-haul trucking enterprises. Instead of waiting 30 to 60 or even 90 days for payment after all a delivering a load for one of your customers, factoring gives you the cash flow you need to maintain important costs such as equipment maintenance, staff salaries and benefits, fuel costs, rent, and other overhead.
Any carrier who has ever been stuck without the cash on hand to meet these payments should understand that freight factoring provides important relief. Once approved, a process that can take as little as 2 to 3 days, carriers can see their invoices funded in as little as 24 hours. In a time of tight bank restrictions and increasing difficulty in obtaining loans, factoring your accounts receivable is a wonderful alternative that allows you to focus less on chasing down customers for payment and more on growth.
How Does It Work?
The factoring process is also very simple. It begins when you book and haul a load, and if you’ve done business with this customer in the past, most factoring companies will automatically give you the green light. Otherwise, your factoring partner may want to perform a credit check prior to authorization to ensure that the customer won’t default.
Once the load is delivered, you submit the proof of delivery and other supporting documents your factoring company, who then advances the funds to you and charges a small factoring fee. A reliable factor such as Accutrac Capital will advance up to 97% of the invoice value, and remit the remaining 3% reserve once they successfully collect from your customer.
Choose the Right Plan
A sound factoring company will offer a number of different plans aimed at helping trucking companies of varying sizes and structures. Be sure that you choose a factoring company that specializes in the trucking and transportation industry and knows your business inside and out, or better yet learn more at Accutrac Capital where you’ll find their factoring plans explained in full.
Consider flat fee factoring, for example, that starts as low as 1.59%. Or perhaps if you have a larger fleet on the road, you might want to consider a factoring line of credit which offers you maximum control. This starts at 0.022%. Or if you have faster paying customers and you only need to factor for the short-term, consider flex factoring that starts at an industry low 0.49% for up to 10 days.
If your trucking company is in need of flexible funding options, remember that factoring your A.R. invoices can help you meet your daily expenses and maximize cash flow. If you want to learn more about freight factoring and the various plans available, get in touch with a factoring company now.