Many businesses get to a point where the cash flow is too low that the business operations are affected. When this happens to your business, how do you recover from it? How do you get an advance business capital?
If you are in the trucking business you are likely to experience overwhelming and sometimes even unstable demand.
According to research, about 12 million trucks, locomotives, rail cars, and other vessels move goods through the transportation network, so things can be hectic. Besides that, you need to consider all the costs involved in running all the trucking operations. If you are in the trucking business, you already know that payments for business completed can take as long as 30 to 90 days. If you heavily rely on this money, your business can come to a standstill before the payment is done.
Lucky for you, there are several ways you can reduce this waiting time before you collect your receivables. Some brokers can offer quick payment options for truckers in a very short period, sometimes as short as 48 hours. Of course, this would be at a discounted load, and it can range between 5% to 10% plus the fees. For instance, if you’re going to run a load for $5000 and the broker offers you a 5% discount, the payment you will get will be $4,750 for that load. Apart from the brokers, your next best option is invoice factoring from a trucking factoring service.
What exactly is invoice factoring?
Invoice factoring is like a quick pay option although factoring companies will handle most of your receivables either from brokers or directly from their customers. One of the best things about this is that you won’t have to deal with different brokers, and factoring charges are usually lower as well. As long as you find the right trucking factoring service, your business can benefit immensely from it.
A trucking factoring service company will advance funds on a certain percentage of your invoice. As soon as your customers pay their invoices, the company pays the remaining percentage after taking any fees involved.
It’s very easy to take advantage of one of the best invoice factoring companies in order to cover your expenses and grow your business.
How exactly does invoice factoring work?
Business invoice factoring is a very straight-forward process. Before you choose a company, you can start by asking several companies to give you a quote. This will give you an idea of how much they’re willing to pay for your invoices and how much they’re going to charge you for it. You may also have the company call you so you can discuss your current cash flow needs.
Once you find the right trucking and factoring service and agree to their terms and conditions, then you can go ahead to apply for the invoice factoring. The requirements will vary from company to company, but once you finalize the agreement, you can submit your invoice and all the relevant documents of the contract.
The trucking factoring service will deposit the money into your account, offer you a check or send the money through any method you desire. The factoring fees could range from 1% to 5% of the value of your invoice. Ensure you inquire about all the fees involved. Some companies will offer you lower fees in advance but charge you hidden fees before the contract comes to an end.
What to consider when choosing a factoring service for trucking
Some of the things you need to consider in are factoring minimums, the flexibility that the company offers, or whether they allow non-recourse funding. Experience in the trucking industry is also essential because they may be able to provide you with other services such as fuel advances or fuel cards that may not be available in other companies. It is also very important that you build a good relationship with the company, and this will happen if they offer good feedback. Check the company reviews on the internet to see what customers have to say about them.