This may come as a surprise, but occasionally trucking company owners can forget just how important cash flow is to their business. They may be so busy focusing on securing new leads on haul contracts, or upgrading their fleet, that suddenly their cash on hand simply doesn’t meet their expenditure needs.

Cash flow is the beating heart of any business and in trucking it comes from sources like payments from customers, bank loans, money from investors, or interest on savings or investments. Without cash flow, you lose the ability to pay basic expenses, from fleet maintenance and other operating expenses to staff salaries and benefits. Naturally, positive cash flow is preferred to the alternative, but sometimes freight businesses simply hit a snag.

While bank loans have often been the traditional go-to for trucking companies who need an influx of cash, loans and lines of credit are becoming more difficult to obtain especially for smaller trucking companies that lack sufficient collateral, or new trucking companies that have yet to build up enough credit. Lack of available funding leads to serious cash flow issues, but freight factoring offers an injection of cash flow when you need it, to help you out of any sudden lack of cash on hand.

Freight factoring also known as transportation factoring puts trucking and transport companies in the position to receive immediate cash for their outstanding invoices. When they partner with the right factoring company, they can sell their unpaid invoices at a discount, allowing them to invest in their fleet, their staff, and future growth opportunities.

Additionally, qualification for using a factoring company for trucking is much easier than securing a loan, and if you are just starting out and don’t have the most impressive credit, you’ll be happy to learn that your qualification is based as much on the credit worthiness of your customers as your own. This means that if you deal with established customers with great credit, you’re well on your way to approval.

Here are three major benefits that factoring your invoices offers your business:

  • High initial advances: most factoring companies offer generous advances. Some offer up to 90 to 95% of the value of the original invoice. Others such as Accutrac Capital will offer you up to 97% of the initial value of the invoice you’re factoring. The remaining 3% is held in reserve and is remitted once your customer pays on the original invoice.

 

  • Quick approvals:factoring with a reliable partner allows carriers to be approved within 1 to 2   business days of completing the application. Once approved, they can begin factoring their invoices immediately, often receiving same day funding.

 

  • Ability to take on more loads: invoice factoring allows you to take on more loads and new customers. Rather than waiting 30 to 60 or even 90 days to receive payment from your slow-paying customers, you can factor their invoices upfront granting you access to the funding you need to take on new contracts. Factoring allows you to pay for additional expenses such as insurance, equipment payments, fuel, and driver pay. This helps you keep your fleet on the road and allows you to take on new business.


If your trucking company could use a cash flow injection, consider freight factoring today. It will ensure your company has access to funding it needs to stay in the black and to keep growing.

Published by Whitney Morgan