Since the postwar mid 20th century, trucking has been a vital part of America’s supply chain. In the past, because of its importance to the national economy,the truckingindustry enjoyed generous funding from both banks and Independent financial firms, providing carriers easy access to financing options in order to help them grow, thus keeping the American economy robust. However, as the industry grew and evolved into the 70s and 80s, the number of freight businesses in the US grew considerably, and so too did competition. As more and more transportation companies came into existence, it became more difficult for trucking company owners to acquire lines of credit and low-interest financing options. For many carriers, it became challenging to get a trucking business off the ground, as the funding necessary for basic operations became harder and harder to secure.
This is why transportation factoring in recent years has become the most readily available and viable option for small and medium-sized trucking enterprises looking for an edge.Factoring has become a mainstream financing option (especially among startup trucking initiatives) because of the difficulty of acquiring business loans from banks and other traditional lenders. Oftentimes, major financial institutions will set too high a bar when it comes to credit scores, and small businesses might not yet have the necessary credit score to secure a loan or a line of credit.
Factoring is such an attractive alternative because trucking factoring companies advance money based mostly on the credit worthiness of the trucking company’s customers, and not entirely on the carrier itself. What this means for even the smallest trucking startup is that factoring is available for vital cash flow injection at the earliest stages of operation.
Transportation factoring allows trucking company owners to monetize their outstanding invoices, rather than waiting 30 to 60 or even 90 days for customers to pay on those invoices. Whether you are just starting up and have a few trucks on the road, or your fleet has grown to a large team of drivers, the right factoring company such as AccutracCapital can help you turn invoices that are currently unpaid into a resource to help you manage cash flow.
Here’s how it works: after you complete a delivery as normal, you give the factoring company the invoice, and in turn they will give you an advance of up to 97% of the value of the invoice as a direct deposit. You will also pay a nominal factoring fee that differs depending on the plan you choose. When the factor collects on the invoice on your behalf, the 3% reserve balance is paid back to you.
When you choose a factoring plan, keep in mind the size of your fleet. Flat fee factoring, to just give one example, costs only a small percentage of the invoice value, starting as low as 1.59%. Flexible factoring, on the other hand, is available for carriers with customers that pay quickly (typically within 10 days) and carries rates starting at 0.49%. If you have a larger fleet, a factoring line of credit is the best option for you, and starts as low as 0.022%.
Contact a factoring company today to learn about how you can finance your invoices and keep your trucks on the road, while managing your cash flow needs and accelerating growth.