One of the biggest challenges faced by any freight or shipping company is the balance of funds required to keep the fleet on the go. While it takes money to move freight, invoices may not be paid immediately by customers. It can be difficult to accept new contracts when your company must wait weeks or months for reimbursement to afford the costs of fuel and other transportation charges. But demanding speedy payment is often not an option, and limits your choice of customers.
How Truck Factoring is Useful
Instead of getting the money directly from your customers, you can instead sell your invoices to a financial factoring company. This gives you almost instant access to cash, sometimes in less than a day, especially if you already have arranged a factoring program. Some factoring companies may even offer advances for fuel, giving cash for as much as 50 percent of fuel costs when a new load is picked up. This means you can take new shipments the instant the vehicles finish the last delivery.
Different Than a Traditional Loan
Unlike a traditional loan from a bank or other lender, truck factoring doesn’t depend on your company’s credit rating. Even if you’ve been denied loans before, a factoring company will likely accept your business provided your customers are creditworthy. A good financial factor will also offer back office support optionally, taking on the responsibility of the billing activity and leaving you free to focus on maintaining the other logistics of managing a shipping company.
Recourse Vs. Non-Recourse
Another option to consider when choosing a factoring plan is whether you want recourse or non-recourse freight factoring. While recourse factoring is somewhat less expensive, non-recourse factoring means that you won’t be liable for any unpaid invoices. Which is the best choice for your business depends on a number of variables, so be sure to discuss plans with the financial company. With a reliable company, you should be assigned to a personal account manager to assist you in the smooth handling of your factoring.
Getting Paid Quickly
Finally, to ensure that you are paid quickly and efficiently, look for a truck factoring program that offers funding on copies. Submitting original financial documents such as invoices can be time-consuming and expensive. Your factor should ideally accept scans, faxes and other types of copies, allowing for speedy payments. It’s also better if they don’t have volume limits on invoices.
Fast payments are important for maintaining a successful shipping or freight business. With truck factoring, you can get the cash you need from your invoices to keep your company up and running.