With the economy struggling, especially within the trucking industry, many fleet owners and owner operators are finding it increasingly difficult to get approved for a bank loan. Even those that get approved are often too scared to go through with one due to the rates and interest.
If this sounds like you, your trucking company doesn’t have to suffer anymore. With freight factoring, your company can remain afloat even through difficult times. As long as you can find the work, cash flow won’t be an issue and you can continue doing what you love.
So, what is freight factoring?
Freight factoring is a service that helps trucking companies like yours get a handle on their cash flow. Since many clients don’t end up paying you for the delivery until 30-90 days have passed, this leaves your trucking company scrambling around just to pay your daily, weekly, and monthly bills.
Bills don’t wait for your clients to pay and you shouldn’t have to wait either. When you sign up with a factor, they pay you an advance on any open invoices that qualify for freight factoring. The advance is generally between 75-90%, with the remaining 10% being due back to you when the client pays — minus a small fee.
Adding to the wonderful benefits of freight factoring, the factor will handle the accounts receivables. You don’t have to contact the customer and the customer will send the payment to the factor. All you have to do is worry about getting that next job and finding that next load.
Freight Factoring vs. Bank Loans
There are plenty of differences between a bank loan and freight factoring, but it’s clear which one is designed to help your business succeed (factoring) and which one is designed to feed on your business for many years to come (loan).
With bank loans, you have an obligation to pay interest and principal over a long period of time. The funding is eventually capped by the bank, it might take several months to get approved, they determine approval by credit history, and aren’t built for most startups.
On the other hand, freight factoring has no interest (just a small fee for each invoice), unlimited funding potential, approval within a few days, funding within 24-48 hours, and is perfect for startups. Plus, approval is determined by your client’s credit history — not yours.
Getting Started With Freight Factoring Today
There are a lot of benefits to freight factoring, as shown above. Beyond that, they also provide fuel cards that can help you save at the pump each and every day. Many factors also will have partnerships with maintenance shops across the country, giving you extra discounts on repairs and maintenance.
If you want to get started with freight factoring today and give your trucking company some comfortability, then head over to our ratings so you can see the best freight factoring companies you should consider signing a contract with. In the event you have further questions, contact us today and we’ll assist you!
References
Corp, Apex Capital. “What Is Freight Factoring: Apex Capital’s Guide to Freight Factoring.” Apex Capital | Freight Factoring for Trucking Companies, 18 Feb. 2019, www.apexcapitalcorp.com/factoring-guide/what-is-freight-factoring/.
“How Is Factoring Different from Asset-Based Lending?” RTS, www.rtsinc.com/articles/how-factoring-different-asset-based-lending.