How Factoring Supports the Trucking Industry

factoring

Millions of us rely on the tons of cargo moved up and down the highways and interstates each day. The trucking industry hauls everything from grocery store produce to electronics, carrying more than 71% of America’s freight tonnage. Despite this high demand, most smaller trucking operations have a cash flow problem. Slim margins, high costs, and unpaid invoices pose a threat to their livelihood.

Complications like truck breakdowns can make or break the success of a small business when it’s depending on the revenue from the next delivery. Find out how to keep cash flowing and make managing clients easier at the same time with factoring.

How It Works

Trucking is a very capital-intensive industry, where it costs money to make money. Typically an invoice is issued when a load is dropped with the standard 30-day repayment terms. Even when these invoices are paid on time, most small companies struggle to afford salary, insurance, and refueling supplies while they wait. Faster payment options can help keep truckers on the road.

Cash flow and factoring services help put cash in hand by buying up unpaid invoices at discounted prices. The factor then collects revenue and the truckers get quick, sometimes same-day, funding. 

There are several methods for receiving factor funds, for example, putting money onto a company provided fuel card restricted for use at truck stops, or receiving payments directly into a bank account. Wire transfers are a common option, but are often problematic for those with immediate purchasing needs. The funds are accessible once settled—a time frame determined by the banks’ limited operating hours. 

The need for quick access to funds makes instant bank transfers a popular option to fit a truckers’ workstyle. Fast fund availability combined with 24-hour account access makes factoring an ideal choice for the trucking industry.

Traditional Bank Loan or Factoring?

While a traditional bank may be a good choice for simply borrowing funds, factoring provides additional services to help take the weight off of a business. Factoring companies work to provide invoice follow-up and status tracking, an extremely helpful feature for a small business owner who may also be a driver. 

Because factoring companies can be industry specific, they are better able to access risks than traditional banks. And with solutions like recourse, non-recourse billing, and cbCharge, there is an option to fit your factoring needs. 

Cash flow, accessibility, and service all impact the success of a business. Let the experts at Corporate Billing find the right solutions to help you succeed. Contact us today for more information.