Running a trucking business profitably can be a tough job, considering the many weekly and daily bills that you will have to pay for. Since the shippers pay only at the end of a month or quarter, it can be challenging to maintain a proper cash flow, especially if you are on the road every day. Many truck companies end up borrowing money constantly to make sure their trucks are fueled and running. If you don’t want to be a part of this group, this is what you need to do - Get a Factoring Solution.
Fleet Factoring or Freight Factoring is a process where you sell your account receivables for quicker payment. It is quite simple. Like you normally do, you contract with your shipper to move the load. Then you contact a fleet factoring company to provide you with the finance that you need. The factor will review your contract and let you know if it is eligible for factoring. Once you are done delivering the load, you submit your invoice to the factor and get paid instantly. They might however charge a fee for their service.
It is not just small fleets and owner-operator fleets; fleets of all sizes can take advantage of factoring to manage their cash flow. Here are a few advantages that can help you understand the importance of fleet factoring:
Most factors clear their invoices within 24 hours’ time. If everything is clear, you should even get your money instantly.
With factoring into the picture, you don’t have to spend time tracking down the shipper and pushing for payment. You can put in all your time taking care of your deliveries.
By helping you maintain your cash flow, factoring keeps your tracks fueled at all times and makes sure your employees get paid on time, irrespective of when your shippers clear their dues. You don’t have to worry about paying interest on loans or your credit card transactions.
A service fee is too small a cost compared to the benefits fleet factoring can provide to your business. It is nothing compared to the charges that you would otherwise have to pay on getting your business funded on a daily basis.
Factoring is definitely an easy outlet if you want to get keep your cash flow running in your truck company. However, it is all about finding the right factoring company. The options are many and making a choice might get quite challenging. Here are a few questions you may have to ask before making your decision:
- Is this factoring company trust-worthy?
- Is it only about completing business transactions, or do they actually care about their clients?
- How committed are they to excellence?
Finally all companies are there for a single goal – to make money. But there are a few that are passionate and committed to the success of their clients’ businesses. Choosing a factor like that is going to help you take your trucking business to great heights of success.