Freight bill factoring is one of the oldest and most commonly used forms of funding for trucking and transportation businesses. It essentially works like this: a business fulfills a customer order, that business then invoices the customer and then turns around and sells this invoice at a discount to a third-party factoring company. The factoring company then provides the business with an immediate cash advance minus a small fee. The business’s customer then pays the factoring company directly when the invoice is finally due. The factoring company and then in turn remits the balance of the invoice amount to the business minus a small nominal fee.
If your trucking or transport business is looking for better access to working capital, consider to help keep your cash flow healthy. If your clients have excellent credit but are slow in paying their invoices — or if bank financing is not an option for your enterprise, invoice factoring is the solution you’re looking for. Unlike most financing options, factoring can be provided relatively quickly — often in the same day. This time frame makes freight bill factoring especially attractive to companies that require cash in hands in order to handle immediate cash flow issues.
Factoring for example is a method of financing used in many industries, from marketing and PR, to IT, to retail, to trucking and transportation. It’s a way to collect on your services quickly and fuel your company’s expansion. Rather than waiting for customers to turn over payment, a third-party will and immediately provide businesses with the much-needed cash that is owned to them. This is especially useful for freight and courier services whose customers can take anywhere from 1-3 months to pay these outstanding charges.
Typically, the factoring entity will provide 97% of the invoice payment to their clients less a small fee, then take it upon themselves to track down customers for reimbursement. The remaining percentage is returned to clients when the invoice is paid in full. There are even specialized services depending which sector you’re working in.
Accutrac Capital for example provides financing for clients in the trucking and transportation industries exclusively – enabling them to pay drivers, replace their vehicles with better models, purchase a brand-new fleet, take care of their existing utility bills, and more. Their plans are designed to suit businesses of many sizes, from small truck companies to large fleets.
Few companies can afford to wait 30 to 90 days to get paid on an outstanding invoice, which is why so many trucking companies use invoice financing as part of overall financial strategy. If you run a trucking company of any size, you realize how many challenges there are. From payroll to invoicing to staffing, any fleet or transportation company faces a every day. No wonder so many companies are utilizing the flexibility of freight bill factoring to maintain cash flow and seize growth opportunities.