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5 Ways Transportation Factoring Can Help Boost Your Bottom Line
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5 Ways Transportation Factoring Can Help Boost Your Bottom Line

Small business transportation owners are going to continue to look for ways to boost their bottom line. The Commercial Carrier Journal recently published some findings from the American Trucking Associations’ Management Conference and Exhibition on the economic and growth forecast for truckers in their article – ATA economy panel: Low GDP growth, higher costs will pressure carrier margins. Bottom line… it looks like stagnant growth for both companies and the industry. As ATA Chief Economist, Bob Costello, said at the conference and in the article:

I know I sound like a broken record, but all of this is going to lead to a capacity crunch. There are still fewer trucks in the market today than there were before the Great Recession. But until we get to those consistent levels of growth, margins will be under pressure because the costs of fuel, driver recruitment and retention and equipment will rise faster than freight rates… However, once capacity does tighten, carriers will see improvement on the bottom line. 

Needless to say, pressure on carrier margins can take its toll on cash flow; cash needed for fuel, truck repairs, and payroll, which is why transportation or freight factoring may be a good option. Factoring turns your invoices into quick cash. Utilized by businesses in many industries, including transportation and trucking, this quick and easy cash flow solution allows companies to access crucial working capital and pay upfront expenses without having to wait 30, 60 or even 90 days for a payment on their invoice.

Here are 5 financial benefits transportation or freight factoring can provide to your company:

  1. Get fast access to cash. Meeting payroll, making unforeseen fleet repairs, or simply paying an expense can play havoc on cash flow, but transportation factoring eliminates the need to wait for invoice payments.
  2. Realize greater back-office efficiency. Good factoring companies offer complete A/R management services, which can save you time, money, and headcount, while improving office efficiency.
  3. Improve your company’s credit rating. With fast access to your money (notice I said your money), you’re better able to pay vendors on time, which establishes and improves your credit rating.
  4. Reduce or eliminate further debt. Notice above that I said your money… factoring is not a loan, so you’re not incurring any debt, and with fees generally a penny or two on the dollar, the cost to access funds are significantly lower than any interest rate on a traditional loan.
  5. Increase revenue. With fast access to your money, you can fund your next job faster, leading to growth.

Once you find a transportation or freight factoring company that matches your needs, you’ll want to make sure you really benefit from the relationship. Download our FREE whitepaper on how to get the most out of your factoring relationship by clicking here.

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