5 reasons successful trucking companies use factoring to help improve their productivity!

Need help with funding your new trucking business? Look no further – we have the perfect solution to help your business get on its feet and get moving! If you are in the trucking industry, we have the ideal funding solution to boost your productivity, improve your clientele, boost your reputation, and increase your target market.

A few questions about trucking invoice factoring!

What is trucking invoice factoring?

Invoice factoring is the process of a third-party company taking ownership of your unpaid invoices from your clients. While the third-party company has your invoices, they will provide you with a percentage of the unpaid invoices. This percentage is determined by the trucking factoring company and typically ranges between 75 and 95% of the invoice depending on the client’s credit history.

Invoice factoring is similar to receiving a bank loan but with a much faster approval process and higher interest rate. The bank approval process is often weeks or months long, but the approval process for invoice factoring is much easier and quicker, making it accessible for almost every person in the trucking industry. Businesses often choose to use invoice factoring when they are currently struggling to keep a good reputation, pay clients, pay vendors, and earn new clients by improving their services.

By making your accounts receivable, you have quick access to your income and working capital, providing you with a more incredible opportunity to enhance your business when compared to working in a debt zone. This quick cash flow lets you continue building your business instead of focusing on finding money to continue funding your company, collecting payments from stingy clients, or getting yourself out of debt.

Is invoice factoring the same as a bank loan?

Invoice factoring is not identical to a loan, although it has some similarities. Both processes require the trucking company to go through a third party to obtain the necessary capital to keep their business working correctly. However, a factoring process requires the company to hire a trucking factoring company compared to a financial institution.

The factor in invoice factoring purchases your receivables at a lower price, meaning you don’t have to repay interest to the factoring company. In addition, the approval process of invoice factoring is much quicker than bank loans, which can sometimes take weeks or months to receive approval. Using a trucking factoring company is a much more brilliant move for those new at business who do not have good credit scores or have no working capital to get their business up and running.

How do trucking factoring companies work?

Trucking factoring follows specific steps for every business in all sectors. By knowing the step of invoice factoring, you can ensure the company you are doing business with is reputable. Check out the steps of how trucking factoring companies do business:

• The company submits unpaid invoices for work completed. The unpaid invoices can range in price and unpaid time, with some companies taking between 30 and 90 days to submit payment. The amount of time the client has to pay will vary depending on their reputability, credit score, and past non payments. Those reputable may have a 90-day payment period, whereas untrustworthy clients may have to pay upfront for services.
• The factory company will verify the invoices and pay you the funds within 24 hours of receiving the invoice. The funds will typically be deposited in your account between 1 and 5 days after submitting the invoices, making it possible for you to pay people back by the end of the week. The factoring company will usually have a rate of between 70 and 90%, depending on your income, work history, and credit score of the clients.
• The factoring company collects payment from your clients according to your pre-set contract. Your trucking factoring company will set a deal with these clients ahead of time to ensure both parties are clear on what the payment period is. It will be 30 days in some cases, and in other cases, it will be as high as 90 days. You don’t typically find payment periods of greater than 90 days unless they are a repeating and trustworthy client.
• When the client receives the payment, the invoice factoring company will pay the remainder of the invoice amount, except for a small factoring fee which they will keep for themselves for their services. Fortunately, this service fee is small and does not require a hefty payment.
• For example, if the invoice were for $10,000, the factoring company would give you between $7,500 and $9,500. When the client pays the $10,000, the truck factoring company will pay the rest to your account and keep a small fee.

5 reasons to use a trucking factoring company!

If you own a trucking company, you should use a trucking factoring company to ensure you can stay afloat, get new clients, pay vendors, and pay employees on time. If you have disgruntled workers, you can be sure that your business will suffer. Furthermore, if vendors are never paid on time, they will cease operations with you. Make sure you keep an excellent reputation to uphold a high ranking in your industry – you can do so by having a constant cash flow!

Whether it be a small trucking company or a massive global corporation, using trucking factoring is an easy and simple way to maintain steady capital instead of going into the debt zone. Factoring your invoices and submitting your bills to a reputable company have many advantages for other funding methods.

Although other funding methods may seem more trustworthy and widely used, like bank loans, factoring is very common in the trucking industry. Therefore, you should choose the popular method that is time-tested in your niche industry since it has worked for thousands of businesses in the past.

In the long run, using trucking factoring companies is the most brilliant way to earn a steady income, pay daily expenses, and acquire new clients into your target market. Let’s see the best benefits of using a trucking factoring company and why YOU should do so!

Improve cash flow

One of the most significant benefits of using a trucking factoring company is the cash advances. Cash on hand means you can easily pay co-workers, vendors, employees, and other workers to keep them happy, motivated, and doing great work for or with your company. Happy employees improve your productivity and ensure you have a good reputation moving forward!

Factoring helps your company pay workers, buy daily necessities, and increase your workload capabilities. Paying your vendors and employees ensures they remain loyal to your company, preventing a high turnover in your business.

Furthermore, you can receive money on the same day to pay vendors on the spot when you talk to them in person. This avoids any awkward meetings and unnecessary confrontations that can harm business relationships.

Easy to obtain

Invoice factoring is more accessible to acquire than other loan options for trucking companies. If you do not have a good credit score or your client’s credit scores are unfavorable, bank loans will not be practical. Instead, a trucking factoring company can help pay your invoices without questioning your clients.

Getting invoice factoring is easy and fast, making it much simpler to obtain than a bank or personal loan. Furthermore, trucking invoice factoring businesses know that each business is unique and can cater to your individual needs regarding your personal requests and client needs.

No long-term contracts

Long-term contracts can lead to broken deals and accruing debt – something you are trying to avoid with your new trucking business. Instead of promising too much with a bank or giving too much collateral to a financial institution to obtain a loan, using a trucking factoring company means you can sign a short-term contract.

Start-up friendly

Furthermore, invoice factoring is start-up-friendly for those just creating a new business in the trucking industry. You don’t have to worry about having a long-standing reputation or excess working capital to acquire invoice factoring – instead, just apply and be honest with the trucking factoring company.

Potential of growth with your business

Working with a trucking factoring company gives you the opportunity for your company to grow. If you are in debt, you can’t take on new clients and new projects. However, with constant cash flow, you will never have to turn down new potential clients, opportunities, or resources that can greatly help your business in the long run. In addition, invoice factoring can increase in size along with your business. Instead of bank lines with credit limits, the trucking invoice company of your choice can grow alongside you and help you during your business venture.

Conclusion

As you can see, working with a trucking factoring company is a great way to keep yourself in good financial standing moving forward. Although starting a new business can be daunting, it doesn’t have to have proper financial backing. Factoring can help you obtain constant cash flow, grow your business, get new clients, avoid long-term promises and contracts, and successfully start your new business.