When starting your own trucking company, whether you’re an owner/operator or a fleet owner, you’re going to have several obstacles to overcome. Of all the things working against you, cash flow is the one thing that will pose the greatest threat to your survival.
Luckily, there’s one thing out there working in your favor when it comes to cash flow and that’s called freight factoring. If you’re new to the trucking industry, the freight factoring service might be a new concept to you. The good news is it’s easy to understand and even easier to get started.
To help you better understand what this service is, why it’s so crucial to your trucking company, and all the hidden benefits of freight factoring, we’ll discuss everything you need to know below!
Why Is Freight Factoring So Crucial?
One of the most common troubles for a trucking company is dealing with the invoices that go 30-90 days without being paid by the client. While this is a typical part of the trucking process, it doesn’t do you any favors when bills and expenses arrive at your door on schedule.
Without freight factoring, you would eventually find your accounts receivables department backed up with unpaid invoices. Not only will this take away valuable time, but it will cause frustration when your cash flow starts to diminish.
Freight factoring allows you to bring in a third party to handle those unpaid invoices for you. Better yet, you’ll receive an advance of anywhere from 70-90% to ensure your cash flow isn’t completely damaged as a result. The rest of the invoice will be paid back to you once the factor receives payment from the client — minus a small fee.
You finish your delivery, you get paid within 24 hours, and you don’t have to worry about your accounts receivables getting slammed — what sounds better than that?
The Hidden Benefits of Freight Factoring
If that wasn’t enough to get you excited, let’s discuss some of the hidden benefits of freight factoring — one of which is the fuel card. Of course, you’re likely already expecting fuel to be one of your biggest expenses. With a fuel card, you can receive valuable savings on the fuel you purchase every day, as well as easy fuel management solutions when working with a fleet.
In addition to that, many factors can offer valuable discounts on truck maintenance and truck repair costs. This is crucial when keeping your trucks at peak performance for your drivers. A well-maintained truck is essential to a trucking company.
Among the other hidden benefits of freight factoring are free credit checks, mobile apps that help you stay organized, and easy-to-make aging reports.
The best part about freight factoring is how easy it is to get started. In fact, we’ve already done a majority of the work for you by narrowing your company selection down to the top ones in the industry today. Take a look at our reviews to see how we’ve rated them and find the company that works for you!
References
Corp, Apex Capital. “The Benefits of Freight Factoring: Apex Capital’s Factoring Guide.” Apex Capital | Freight Factoring for Trucking Companies, 7 Apr. 2020, www.apexcapitalcorp.com/factoring-guide/benefits-of-freight-factoring/.
“What Is Factoring?” RTS, www.rtsinc.com/guides/what-factoring.