If you run any kind of business, you know that major issues will arise when cash flow problems occur. This is especially true in the trucking industry, which is known to be fickle, with many sudden dips and surges in cash flow. Simply put, money due in the form of outstanding invoices cannot help you with immediate cash on hand needs. Just because a company owes you $10,000, does not mean that you can turn that amount receivable into the cash you need to cover overhead, wages, fleet management, and other expenses. While there are ways to improve payroll practices and strategies to cut down on costs, at the end of the day, you still need cash on hand.
This is why the practice of factoring invoices is integral to the trucking industry. To avoid your operations grinding to a halt, transportation factoring (which is the practice of factoring unpaid invoices in exchange for cash upfront) has been used for decades in the trucking industry to secure cash now rather than waiting months for slow paying customers to finally close out their invoices. There are 3 major benefits that come with working with an experienced trucking factoring company which include:
Improving cash flow: When you have cash flow problems in any business, it can cause a number of issues in terms of basic productivity and operations. Not having the cash on hand that you need for basic daily expenses can slow your business to a stop, which can snowball into more and more financial losses for your business. With transportation factoring, you have access to the cash you need within a day, allowing you to continue to run your business without any cash flow hiccups. In the trucking industry, cash on hand is necessary for fuel, insurance, as well as emergency repair needs. A transportation factoring provider is therefore essential to keeping your operations running smoothly day-to-day.
Business growth: Having steady cash flow on hand is the key to growing your business. With funding upfront in the form of transportation factoring, you can take on new contracts, regardless of how slow the new customer might be. This is especially beneficial with large corporate accounts where it isn’t strange to see customers take up to three months to pay on their invoices. Knowing you can factor your invoices for cash means that you no longer have to pass on a customer simply because they will pay slowly.
Putting collection duties in someone else’s hands: Many business owners, especially in the trucking industry, know how frustrating it is to have to chase down customers for payment on outstanding invoices. For smaller companies who rely on the dollar value of almost each and every invoice are particularly subject to this frustration. By selling your accounts receivable at a discount to a transportation factoring company, you not only receive the money you need upfront, but you also pass off the collection responsibilities to the factor.
In short, factoring for trucking companies reduces stress and ensures that your trucking business has the cash on hand necessary to run smoothly and to take on larger contracts to ensure growth. Contact a transportation factoring company today to find out how simple the process can be.