Working in the trucking industry is no walk in the park. Everyday demands keep you busier than you ever thought you’d be.
There’s so much to do:
- Finding loads
- Hauling a load
- Dispatching drivers
- Billing and collections
- Truck repairs and regular maintenance
- And on and on.
Owning and operating a trucking business can be a stress-filled endeavor. But there is a way to relieve at least some of your stress and grow your business at the same time: freight invoice factoring. Factoring is a quick and easy way to get paid for your invoices by selling them to a factoring company.
You might not always need to factor your invoices but there are some situations where it makes sense. You might benefit from freight factoring if:
1. Business Has Started Picking Up
It takes a steady flow of cash to keep a trucking company rolling. Expenses like truck and trailer payments, fuel, payroll, insurance, permits, tolls, maintenance and repairs are constant.
At times you might feel like you can’t keep up with the operating costs, let alone get ahead. It doesn’t help that you have to wait 30 or even 90 days to get paid. If you can’t buy fuel, you can’t run your trucks. There’s no way around that unless you apply for a loan, get a fuel advance or factor invoices.
Factoring is a great solution for both fleets and owner operators because it eliminates wait times to get paid. When you’re factoring, you’re getting paid fast. No more waiting around. Now you can use the funds to keep hauling and delivering loads and you get consistent cash flow. You’re able to stay ahead of your expenses. And you won’t miss out on revenue from trucks sitting idle because you’re able to get back on the road right away.
2. You Need to Get Paid Right Away
This is the most common reason for cash flow problems in the trucking business. Long wait times for invoice payments can be a killer for a trucking company.
Waiting 30 days for payment of loads already delivered is not good for small business owners. But you have to give your customers favorable payment terms. So, you try to stick it out until payment time.
And when your cash runs out you have to either take on debt or not run your trucks until you get paid. If your trucks are financed and you’re in a cash crunch, you’re stuck.
And what happens to your drivers when you reach that point? They can’t be happy about their unpredictable paychecks. You know what happens when drivers aren’t happy? They leave.
Factoring eliminates the long wait times for invoice payments. You have cash the same day you deliver loads. That means you never have drivers sitting idle and not being paid.
Your cash flow is consistent and immediate. You can pay your drivers well and on time. They’ll be happy in their work and more productive.
With factoring, you have cash available to offer incentives and other benefits to your drivers. Happy drivers don’t leave and your company gains a reputation as a good place to work.
Before you know it, you’ll be recruiting more great drivers.
3. You Need Help With the Business Side of Your Trucking Business
A common saying among financial advisors goes like this, “Failing to plan is planning to fail.” That message rings true for trucking businesses.
Many owner operators and small fleets fail because they are run by people who are truckers and not business managers. They don’t really know how to grow their business.
So, they depend on their hard work and blind luck to see them to prosperity. But that game plan rarely results in success in trucking.
To experience growth you need a plan to accomplish and manage growth. That plan must include a way to manage cash flow and invest in your business.
Even if you’re only working with one truck, you need to run it as a business, one with clear goals. It starts with cutting wait times for invoice payments and having someone handle your billing and collections.
Sound impossible? It’s not. That’s exactly what factoring will do for you. It eliminates long wait times for payment. And freight factoring companies like eCapital handle all of your billing and collections for you. This leaves you to do what you do best: trucking.
Factoring makes it easy for you to manage cash flow issues. It makes it possible for you to create a solid plan for growth of your company. And it provides you with the capital you need to keep your trucks running and your business growing. Invest the additional cash into your business to fund growth.
4. You Don’t Want to (Or Can’t) Borrow Funds
Let’s face it, big banks don’t want to loan money to trucking companies. If they did, it wouldn’t be so difficult to get approved. They know that trucking is a risky business and most banks won’t take the risk.
There can be several reasons why your business can’t be approved:
- You don’t have collateral. Maybe your trucks are already financed and put up for collateral.
- You’re new to the business. Banks know there is a high failure rate among transportation start-ups.
- You lack the required down payment or cash deposit.
- You have bad credit. Maybe you had a run of hard luck and got behind in payments or are using too much of your available credit.
The good news is that none of those things will keep you from being approved for freight invoice factoring. One of the defining features of factoring is that it’s a quick approval process so you can get paid in 24 hours and never have to worry about cash emergencies.
Here’s why: approval is not dependent on your credit. You can be approved even if you have bad credit. Approval depends on the credit worthiness of your customers; it has nothing to do with your credit, whether it’s good or bad. As long as your customers have a good payment history, you’ll be approved.
Factoring is not lending so you don’t need collateral or a down payment. You’re getting paid for work you’ve already done. Your credit history is not important when getting approved to factor invoices.
If any of the above scenarios sound familiar, it’s time you started factoring your invoices. You’ll get consistent cash flow to stay ahead of business expenses. And you’ll have money to grow your business so you can keep moving forward…on the road again.