If you own a trucking company of any size and you are looking for working capital invoice factoring or freight factoring, is a common solution to help you fuel your business and maintain positive cash flow. If your customers have excellent credit but take too long to pay (sometimes taking 30 to 90 days to pay an invoice), freight factoring allows you to receive an advance of up to 97% of the accounts receivable amount on the day the delivery is completed for the services performed — which allows you to collect the funds immediately instead of waiting for the invoice to clear.
Freight factoring is the solution to meet tax, payroll, material, supplier, fuel, and employee salary expenses in order to keep your business functioning. The factoring company effectively assumes the right to receive the payment for the invoices and collects on your behalf. A reliable factor such as Accutrac Capital will pay 97% of the value of the invoice to you upfront while it collects, allowing you to use those funds to keep your business running. Additionally, third-party factors will only charge a modest factoring fee, which means you can use freight factoring not as a one-time tactic, but rather as part of an overall, year-long financial strategy.
Maintain Cash Flow
Selling invoices provides your company (whether it is a trucking, fleet, or transportation company) upfront cash flow allowing you to expand your working capital. This line of working capital is also effectively unlimited in nature because it depends on sales turnover rather than the leveraging capability of your assets. Having sufficient working capital means that your business can meet its operational objectives, while also seizing emerging market opportunities.
Freight factoring also helps your company eliminate the need for debt collection, which enables your staff to concentrate on core operations. Freight factoring also has a cost cutting incentives because the factor assumes the credit control functions, such as collecting on the invoices and maintaining accounts receivables. Freeing up these functions buys you significant time and resources for the running of your business.
Qualifying for invoice factoring is based on the credit strength of your customers — not on the credit worthiness of your business. A factoring company will research the credit worthiness of your customers on your behalf before agreeing to terms. This allows start up companies or companies dealing with credit issues, but haul for customers with good credit, to sell its invoices to the factoring company creating immediate positive cash flow.
Plans from Accutrac include flat fee factoring (which is the most common among trucking companies, and offers a simple and easy to manage option from 1.59% for up to 90 days with an easy-to-calculate one-time cost. For larger fleets or operations, consider a factoring line of credit from 0.022% per day, or read these FAQs about factoring lines of credit to learn more. For companies with fast-paying customers, consider flex factoring, which offers an industry-competitive 0.49% factoring fee for up to 10 days.
If you’re looking to cash in on outstanding invoices, consider a third-party factor to help you re-invigorate your cash flow. Contact a freight factoring company today to get your business back in the fast lane.