Ask any business owner in the trucking industry and they will tell you how important financing is to their day-to-day financial strategies. And yet, for years owners of trucking companies were unable to secure funding when they needed it because banks and other traditional lenders often used difficult hurdles and long turnaround times to dissuade the trucking industry from seeking loans at all. This should come as no surprise, considering banks and other traditional lenders consider trucking to be a fickle and high-risk industry.
Luckily, over the last few decades, a new type of financing has slowly become more and more popular among trucking company owners.
As invoice factoring – also known as freight bill or transportation factoring – becomes more mainstream, trucking and transportation owners are likely to continue to use it as part of their overall financial strategy. In case you’re unaware, transportation factoring is a cash advance funding arrangement between you and a third-party factoring company that allows you to sell unpaid customer invoices at a discount for upfront cash, allowing you to pay for day-to-day costs as the need arises.
A new generation of invoice factoring companies are helping to change the way this type of financing is viewed – in part by offering invoice factoring plans that are transparent, convenient, and quick enough to help companies of any size deal with immediate cash flow crises. Factoring companies will pay you up to 97% of the value of the invoice upfront (minus a nominal factoring fee) and keep the remaining 3% in reserve. They will then collect the invoice on your behalf while you worry about your typical operations, which includes hauling more freight generating more income. The reserve will be returned once they collect.
Some factoring companies, such as Accutrac Capital to give you just one example, offer a number of rate packages that benefit differing trucking companies at different stages of development, including:
Flat Fee Factoring
- A simple financing option with an easy-to-calculate one-time cost
- From as low as 1.59% for up to 90 Days
Factoring Line of Credit
An option designed for larger fleets and carriers
- From 0.022% per day
- A flexible line of credit that provides maximum value and control
- Only 0.49% for up to 10 days
- An ideal funding option for carriers of any size whose companies pay their invoices quickly.
Freight factoring companies offer several key advantages including the fact that you have access to high initial advances not seen with other types of financing. Not only do freight factoring companies offer 90 to 95% (or more!) of the value of the invoices you sell them, but they also offer fuel advances or fuel cards as part of larger packages. But the biggest edge of all is probably the quick approval rate and funding turnaround time. In fact, approval rates can happen within two days, and factoring an invoice can net you the funds you need within a day.
If you’re interested in a financing solution that allows you to turn unpaid invoices into immediate funding solutions, consider partnering with a factoring company – especially one that specializes in the particular needs of the trucking industry. You’ll find that turning your focus away from collecting on invoices to working on growth and sustainability is greatly beneficial.