Factoring financing is an innovative business strategy that allows your company to finance slow-paying invoices from creditworthy customers. The financing company will use your invoice as collateral to advance your funds so that you can continue with your operations. You will be able to handle your pressing expenses and tackle other business projects. There are other leading reasons why your trucking company should consider factoring financing.
1. Improved Cash Flow
Cash flow is an important consideration in any trucking company out there in the world. Companies operating in other sectors need to have sufficient cash flow as well. Studies show that factoring companies can agree to help small enterprises bridge invoice payment gaps with 90% of the original invoice upfront payment. This will help your company to have the much-needed cash flow so that it can handle expenses as and when they fall due. It is a strategic method of improving an organization’s liquidity.
2. Extend Payment Terms
Traditionally, most of the invoices are supposed to be cleared within 30 days after credit. Most of the government organizations are required to pay for all goods ordered within 30 days. Although this is good because it will help the company to get funds immediately, some small enterprises might struggle to pay within the stipulated period, which could bring problems. Factoring financing helps you to extend payment duration for small companies. This is a strategy that you can use to attract and keep customers.
3. Straightforward Qualifications
As a business owner, you already have an experience of how hard it is to get financing from mainstream lenders. Most of them scrutinize your financial well-being while others analyze your credit history. In most cases, you don’t get financing from these organizations. To qualify for factoring financing, you don’t have to have a historical trend of assets and creditworthiness. All you need to have is a solid customer flow in your business. Most of the trucking factoring companies will advance you finds based on your customers.
4. Quick Source of Funding
Besides taking so much time to analyze your loan qualifications and suitability, it may take more than a month for banks to lend you money. By the time your company could have already collapsed or experiencing serious financial problems. On the other hand, invoice funding companies takes the quickest time possible to advance you funds. A reliable trucking factoring service can advance you funds within one week, which will give you ample time to respond to a cash crunch in your organization.
5. Eliminating Bad Debt
Any company is scared by the probability of experiencing bad debts. As a trucking company, you are hoping that your customers will pay their debts in time so that your company can continue offering services to other customers. However, some customers may fail to pay, which means that you will have to deal with the issue of bad debts. However, you can pass this burden to invoice factoring companies. By passing your debts to factoring companies, you eliminate the problem of having bad debts in your income statement.
6. No Debts Incurred
Most of the businesses don’t want to have debts on their financial statements because it hinders the financial health of their companies. It could lead to a lack of funding from other sources of finance. It has also been proven that excessive debts may make it hard for a company to find suitable buyers. However, invoice funding is not a load. It is a funding advance that is hedged against the company’s invoices. This means that the financial well-being of an organization is maintained. Therefore, a company can easily get funds from other lenders or get a suitable buyer when necessary.
As a business owner, you don’t have to struggle with liquidity problems again. All you need is to contact factoring financing companies that offer invoice funding, and you will get sufficient funds to handle your financial needs. However, you should make sure that you get the best invoice funding company in the industry to avoid disputes.