Factoring invoices is useful for several reasons. It allows a trucking company to raise cash without obtaining brand-new financial obligation. While debt is occasionally required, the majority of trucking companies would choose to raise cash without obtaining cash. Debt is dangerous, and when it can't be paid back, possessions can be repossessed. If the debt is large enough, it may even require a trucking companies out of business.
Profits That Lie Hidden In Your Company - Choose A Freight?Factoring Company Instead Of A Regular Bank Funding
How to Increase Cash Flow Without Borrowing -Cash Money flow is one of the main reasons businesses fail.
At one time or another, every business, even successful ones, have experienced poor cash flow.
Cash flow does not have to be a problem any more. Do not be fooled -- banks are not the only places you can get funding. Other solutions are available and you do not have to borrow. What is truck factoring ? One solution is called truck factoring. Truck Factoring is the process of selling accounts receivable to an investor rather than waiting to collect the money from the customer. Oh, the Irony- Truck factoring has
an ironic distinction:
It is the financial
backbone of many of America's most successful businesses. Why is this ironic ? Because truck factoring is not taught in business colleges, is seldom mentioned in business plans and is relatively unknown to the majority of most of American business people.
Yet it is a financial process that frees billions of dollars every year, enabling thousands of businesses to grow and prosper. FACTORING has been around for thousands of years. FACTORING Companies are investors who pay cash for the right to receive the future payments on your invoices. An unpaid receivable or invoice has value. It is a debt your customer has agreed pay in the near future. Factoring Principals--Although factoring
deals exclusively with business-to-business transactions, a large percentage of the retail business uses a factoring principal. MasterCard, Visa, and American Express all use a form of factoring in their retail transactions. Using the purest definition of the word, these large consumer finance companies are really just large FACTORING Companies of consumer paper. Think about it: You make a purchase at Sears and charge
it to your MasterCard. The store gets paid almost immediately, even though you do not make payment until you are ready.
For this service, the credit card company charges Sears a fee (typical common normal fees range from two to four percent of the sale). The Benefits Truck Factoring can offer many benefits to cash-hungry companies. Rather than wait 30, 60, 90 days or longer for payment on a product that has already been delivered, a business can factor (sell) its receivables for cash at a small discount
off the amount of
the invoice. Payroll, marketing efforts, and working capital are just a few of the business needs that can be met with instant cash.
Factoring provides the means for a manufacturer to replenish inventory and make more products to sell: There is no longer a need to wait for earlier sales to be paid. FACTORING is not just a cash management tool for manufacturers: Almost any type business can benefit from FACTORING. Generally, a business that extends credit will have 10 to 20 percent
of its annual sales tied up in accounts receivable at any given time. Think for a moment about how much is tied up in 60 days' worth of invoices: You can not pay the power bill or this week s payroll with a customer s invoice, but you can sell that invoice for the cash to meet those obligations. Using truck factoring companies is a fast and easy process. The factor buys the invoice at a discount, usually a few percentage
points less than the face value of the invoice.
The American Trucking Organization states that there are about 200,000 workers with freight trucking businesses and 276,000 private providers trucking firms licensed to operate in the United States that transported, according to their latest searchings for billions of products, supplies and basic materials . There are several common carriers
or in teams on our country roads transporting these vital products to our shops, factories and shipping ports.
And freight factoring companies help many of them and offer their factoring services nationwide including including the following states.
Alaska, Arizona, Arkansas,
California, Colorado, Connecticut, Delaware,
Florida, Georgia, Hawaii, Idaho State,
Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska,
Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming
If you're like most drivers, you're looking for a better company in trucking that might be offering the best jobs in terms of pay, freight, and hometime ' not to mention benefits or a sign on bonus. We've got all of our clients listed based on the states where they're hiring, so you can quickly find the best job in your home state. You'll see the very best nationwide trucking companies that
have positions available.
The largest trucking companies in the U.S. set a revenue record in 2013, but revenuegrowth slowed for the second year in a row.
The combined revenue of the 50 largest motor carriers rose to $106.6 billion last year, according to The JOC Top 50 Trucking Companies list, based on data prepared by SJ Consulting Group in
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Since the mid 1980s Lambert Truck & Haul have been successfully running their freight business. For more than twenty years they've been delivering goods for most major industries in the nation, with business booming as they traversed the country, in all kinds of weather, for all kinds of clients. During the heady times from 2002 to 2007, Lambert was a top rated accounts receivable mastermind of the trucking industry. Very few customers
were behind on their bills, and those customers who were late turned in their overdue payments within an acceptable time frame. The money was flowing, and times were great.
It was just one year later, in 2008, when the economy in the United States took a sharp decline, and both large and small businesses started to notice the squeeze on their pocketbooks: everyone had suddenly gone silent. Business slowed to a crawl. Worse still, it was noticed by Lambert in early 2008 that even though most of their
loyal customers were on time with their payments, there were a few late bloomers who were starting to spread the disease. Spring changed to summer, summer changed to fall, and the CEO of Lambert, John Rondstadt, was beginning to feel very uncomfortable indeed whenever he looked at their weekly Accounts Receivable reports. The numbers of clients who owed him back debt were growing.
He had gone to his administrators and asked them what the problem had been. Were they doing something wrong or different
when it came to reaching out to delinquent accounts? By his bookkeepers records, this wasn't the case. He thought perhaps that he was losing clients to a competitor who offered rock-bottom prices with little to no guarantee of quality performance, and that the folks who owed Lambert money had jumped ship and decided to leave him holding the bag. Perhaps they were unable to pay their debt to him, but were able to meet the costs of a lesser service. So he did the necessary research and, after discussions with friends
in the same field, he realised that no, his customers hadn't gone anywhere else. They had just gone home.
To John Rondstadt the situation looked desperate. John was very concerned, because there were constant overheads, goods to ship, employees to pay, and trucks which needed to be maintained, but there just wasn't the money coming back into the business. At night he would speak to his wife Linda and shake his head in frustration.
""I have a bad feeling, Lin,"" he
would say with deep woe.""Well, what do you think it is?"" she would say.John would stare off for a moment and then close eyes. He could see the fleet of trucks he had purchased over the years. He could see them on the road, delivering good to all his loyal customers. But then a haze would cover his trucks and his vast fleet would vanish to leave just a few. Why couldn?t he work out how to resolve this financial problem with his business?""I know what it is,"" John said.
""I've relied too long on the profits I receive from invoices alone. For too long I've been allowing our clients to let their accounts become overdue.""
All Linda could do was hold his hand and look at him tenderly. 'We know it's a difficult economy at the moment - perhaps it will take a while for people to get on top of their bills'.""
John knew his wife meant well, but he knew that he was responsible for too many people to sit idly by, waiting for the
sun to peak over the clouds.
The next day John strolled into his office and was determined to sit down and make every phone call to every client who had owed Lambert money. Now, it wasn't the most efficient way to spend a day as a chief executive, what he really needed to be doing was to be overseeing all of the other intricacies of shipment and delivery and reaching out to prospective clients or retraining his sales team to do the same. Even though he was doing something to help his company, he
knew he had folks on salary to do just this thing. Wasting money, wasting time - even with the best of intentions, John knew that he was in trouble.
After a half day of contacting debtors in vain - they dodged his calls or promised to call back at worst or made minimal interest-only payments at best - he was about to throw in the towel when his secretary Beverley knocked at his door.
""John, can I have a word?"" she queried, standing in the doorway.""Sure
thing Bev, come on in."" John relaxed back into his chair and looked up at Beverley.""Well John, this afternoon I did some research, trying to work out how we're going to get out of this mess."" She opened up a folder she had been carrying and pulled out a small wad of papers, placing them on the desk in front of him.""Have you ever heard of factoring?"" she asked.""It sounds vaguely familiar. What is factoring""? he asked.""Well,""
she began, ""It?s actually quite simple really. Basically, factoring invoices means that we would get paid immediately for the loads we haul.""""Immediately?"" John interrupted.
""Immediately, yes"" she added, ""In a nutshell, it's pretty easy. We start by having a professional account manager review our figures and help us set up a company profile. That profile will also include investigating our accounts receivable aging reports,
our existing customer credit limits and so on. In addition, factoring will assist in determining our customers' creditworthiness, independent from their credit relationship with our company. It provides a very broad view.??John replied cautiously ""I see - and what happens then???Following the completion of their review and once we've been approved for a contract with the factoring company, then we sit down to negotiate conditions and terms. You'll be surprised at the amount of flexibility, all dependent
upon the credit histories and business volume. The company will advise us the cost to purchase factoring for our company's accounts receivable. Once we arrive at a mutual agreement, the funding begins.?
John leaned forward and reviewed the paperwork closely.""I don't know, Bev - it just sounds too good to be true"", John said quietly.""Now, now, I know, I thought the same thing. But think about it, John: they've guaranteed that experts will do all the paperwork, and
that will free us up to do what we should be doing - focusing on our customers in good standing, and that kind of stuff. They appear to be very flexible, John,"" she underlined a paragraph on the paper before him.""How flexible?"" he asked.""They personalize the factoring rates so that the amount they are willing to take on is commensurate with our needs and our client?s debt. Apparently they can figure this all out in two to four days. ""
sounds pretty good, seeing as we tapped ourselves out with bank loans last year to repair the fleet and money sure is tight. It's imperative that we keep the business rolling as usual, and every day we go unpaid we're getting closer and closer to dealing with some serious issues in both the short term and the long term,"" John said.He took a deep breath and looked at his secretary with something she recognized as hope.""Exactly?. This could be the answer to our prayers: it will solve many
problems we're facing due to these unpaid debts.""
John took a moment to think about this solution, and agreed with his secretary. The customers who were in debt to Lambert Truck & Haul were professional resources of the company, but they were also long-standing friends. Just because they were experiencing difficulties paying their own bills now, John was very concerned about losing these relationships. He was well aware that the economy was in a bad way and that it might be quite a
while before things started picking up. If he didn't handle these debtors in the right way, that unknown amount of time could spell disaster for all of them. He didn't want to lose business but he also didn't want to lose any more money.
""Well, let me think about this tonight Bev, thank you."" Bev nodded, stood up and left the office feeling that she had helped her employer keep on his shirt and hers too.John sat behind his desk and looked over the details Bev had not mentioned
in their meeting. He wondered if there might be other problems freight factoring could help Lambert Truck & Haul with? With his pencil gliding down the sheet he noticed that the factoring company could help fray the cost of fuel with fuel discount cards and fuel advances. In fact, Lambert could receive up to fifty-percent cash advances upon load pick-ups. John was a typical business man: he despised binding contracts that didn't allow room to breathe, so he was pleasantly surprised to see that the factoring
company didn't require a long term contract, that there was no minimum volume required, and that there were no sign-up fees.
""Well, I'll have to tell Billy about this,"" John muttered to himself.Billy is John's son-in-law, and he really admired the ideas behind Lambert, so much so that only two years before he had started his own transportation service business. At that time John knew the struggles Billy would face, but he still encouraged him to follow his dream. With the economy
the way it was, if an established company such as Lambert was struggling then the little guys, like Billy, were going to be in even more trouble. But, maybe the answer for both of them was in freight factoring, and John was going to find out very soon.
A few short months later, after completing the application process, having the legal experts review his credit history, accounts receivable, and statements, finally John was beginning to find his way out of the hole his debtors had created for him.
They adopted reasonable factoring purchase contracts and stopped wasting their own precious time trying to collect debts. They used that time to refocus their efforts in being competitive in new territories. John recalled those dismal months when he wasn't aware of freight factoring, and he shuddered at those memories. He probably wouldn't be in business today had he not learned just in time about freight factoring.
More Trucking Factoring Companies Story Articles
Factoring in the Future of a Trucking Business: A StoryThe phone was ringing on his desk, and Josh Stewart just sat there letting it ring. His morning coffee cooled and his cigarette smoked away in the tray: Josh is thinking, and pondering the biggest decision he's ever had to make for his trucking business. Joshson Trucking Company had reached a turning point and he now had to make a decision as to whether he should sign up with a factoring company,
and indeed if this would be a good or regrettable decision for his business.
Josh?s father had started as an owner-operator and had grown Stewart Trucking Company into a fifteen trailer fleet over forty years. Yes, they had survived some very difficult times when it appeared like they might go under, and even Josh's mother had jumped into the cab at times to make hauls. His father had worked long enough to see the price of hires drop dramatically during the recession and to see the explosion of fuel
prices afterwards. Now the company was solely in Josh?s hands and he wanted to live to see it in better shape for his sons.
To move Stewart Trucking Company ahead into the future, he needed a steady cash flow but there was just not enough money to go around. His employees needed to be paid. They all have families and the usual household bills. Some of the refrigerated trailers were in need of repairs and he felt to stay competitive it was also a good idea to invest in specialized haulers to be ready
for the constant requests he was getting for loads of new energy and agriculture equipment. Every time he had to turn down a request, Stewart Trucking looked weak in a very strong market.
He knew what his father would have said - 'wait, take your time before adding new technology'. Josh chuckled, thinking about his father. His father had been against placing GPS units in the cabs. He would say, ?Why do you need the voice of some woman to tell you to get off at an exit that has been the same exit that
has been there for years?? He smiled to himself as he remembered his father poking fun at the other drivers who switched to automatic, even though automatic was quite obviously more efficient (though less manly). His father days were long gone and technology was actually an important improvement for the business such as having Qualcomm to cut down on fruitless time communicating on the phone for bills of lading.
Josh believed a successful man is always thinking of his next step. What would be the
next step for Stewart Trucking? More importantly, how could he afford it? Funding was all tied up in the mortgage for the office and garage and in the fuel bills. He just finished paying off the small bank loan for installing satellite radio in the trucks for the guys.
But was factoring the answer? If he was being honest, he didn't really understand how it all worked. It sounded a lot like ninth grade algebra which just didn?t feel like it belonged as part of the trucking business. Factoring companies
buy your invoices and manage your accounts receivable for a certain percentage of the invoiced amount. The factoring company gives the trucking business its payment right away which allows the business to have continuous cash flow so it can pay employees, buy fuel, and make repairs for upcoming hauls. Without the assistance of factoring, you have to wait for customers to send you the payment which is often 30 days late. In those 30 days, a trucking company can?t pay its bills and employees in invoices.
had to really consider what his next step was going to be. Josh had heard that there were companies that charged for same day money transfers and would only advance a percentage of the money owed to your company while holding the rest in a private account if they didn?t get their bill payment within 60 or so days. Worse still, if the customer defaulted on payment, the factoring company takes it out of the money supposedly coming to you! He'd even heard about some companies putting you onto a sliding percentage
scale regardless of any previously signed contracts for possibly 3% or 7%, and there you are now with 10% coming as a charge to you out of the freight bill. His friend Ronnie who had a trucking business in Missouri, was run nearly into the ground by a factoring company that charged him the full freight bill on top of the factoring fees. Well, what was the point of going to a factoring company if there was shady business like that going on?
However, it all turned out to be very simple. When he called
the factoring companies he discovered they were very open about their business practices, and very friendly and helpful. Their customer service actually knew things about their company and spoke in nice clear English so he could understand what was being explained. He was quite happy to sign an exclusive contract. He liked the idea of a long term commitment so he knew he wouldn?t have to bother going back and forth to different companies and wasting time filing more forms. Nobody charged him for credit checks
and they offered him a fuel advance on the pick-up of the load. Many companies offered a non-recourse factoring program that suited him just fine. He was more than happy with the figures he was offered in percentage terms on the freight bills. It sounded like a great scheme to him.
It was really refreshing dealing with the factoring people. They were more personable than those loan managers at the bank. It seemed as though those bank people spoke another language, but these factoring guys knew the
trucking business and spoke to him like a client, not like a beggar for a handout. The factoring companies didn?t worry over his credit and the debt troubles his father had had in the past of the company. All the factoring company was interest in was the credit of his customers and on their reliability: this worked great for Josh because he and his father had created a very strong and loyal list of clientele over the years. He knew immediately that there would not be any problems when they were contacted by the
factoring company regarding their invoices. His clients wouldn't have any problems, nor would they think poorly of Stewart Trucking, because the factoring companies handle themselves in such a polite and professional manner, similar to the way his father had managed the business in the past.
Feeling happier now, Josh stepped out of his office to advise his secretary to expect to receive the contract very shortly from the factoring company. There was a new bounce is his step now: he knew instinctively
that this new step would raise the future of his company to a new and higher level, and that all the stress from the past could now be put behind him. He suddenly realized that, with this new cash flow, he could actually expand Stewart Trucking Company and who knows, move into Canada, which had always been his dream. His heart felt full knowing his sons wouldn?t have to worry about money because of the right decisions he had made for their trucking business.
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Trucking Factoring Articles
Factoring in the Future of a Trucking Business: A StoryJosh Stewart let the phone ring on his desk. He let his morning coffee cool and left his cigarette to ash itself in the tray, because he is trying to make the biggest decision ever for his trucking company. Joshson Trucking Company had reached a turning point and he now had to make a decision as to whether he should sign up with a factoring company, and indeed if this would be a good or regrettable
decision for his business.
More than forty years ago Josh's father had started this business working as an owner-operator and eventually growing Stewart Trucking Company into a fifteen trailer fleet. Yes, they had survived some very difficult times when it appeared like they might go under, and even Josh's mother had jumped into the cab at times to make hauls. His father had worked long enough to see the price of hires drop dramatically during the recession and to see the explosion of fuel prices
afterwards. Now the company was solely in Josh?s hands and he wanted to live to see it in better shape for his sons.
There just never seemed to be enough money to go around, and certainly no spare cash, but to move his company successfully into the future he needed a steady and reliable cash flow. He had employees to pay. They had families and household bills too. A few of the refrigerated trailers really needed some maintenance, and in order to stay competitive he really wanted to invest in specialized
haulers to meet the increasing requests for loads of agricultural and energy equipment. He knew that turning down these requests made Stewart Trucking look inefficient and weak in what was currently a strong market.
He knew what his father would have said - 'wait, take your time before adding new technology'. Josh chuckled, thinking about his father. He remembered when his father was totally against installing GPS units in the cabs. His Dad would say ""Why on earth do you need some stranger
telling you to get off the exit that everyone knows has been there for years?? Also his father had the habit of teasing all the drivers he caught switching into automatic even though driving in automatic was much more efficient though not manly in his father?s eyes. His father days were long gone and technology was actually an important improvement for the business such as having Qualcomm to cut down on fruitless time communicating on the phone for bills of lading.
Josh knew he was right in his forward
thinking. How would he take Stewart Trucking to the next level? More importantly, how could he afford it? Funding was all tied up in the mortgage for the office and garage and in the fuel bills. Thankfully he'd just finished paying off the bank loan for the installation of satellite radio in the trucks.
He wondered about factoring - was this the answer for him? If he was being honest, he didn't really understand how it all worked. It sounded a lot like ninth grade algebra which just didn?t feel like
it belonged as part of the trucking business. A factoring company actually purchases your invoices and takes control of your accounts receivable, payment being a certain percentage of the amount invoiced. In return, the factoring company pays the trucking business straight away, providing immediate cash flow for the business to pay staff, purchase fuel, and do any repairs or maintenance. Without the assistance of factoring, you have to wait for customers to send you the payment which is often 30 days late. In
those 30 days, a trucking company can?t pay its bills and employees in invoices.
Now it was time for Josh to do his homework. He had heard of companies charging for same day money transfers, advancing a percentage of the money owed to your business, while the rest is held in a private account if the bill wasn't paid within sixty or more days. Plus it was worse still if the customer didn?t pay up at all because then the factoring company would take it right out of the money supposed to be coming to
you! He'd even heard about some companies putting you onto a sliding percentage scale regardless of any previously signed contracts for possibly 3% or 7%, and there you are now with 10% coming as a charge to you out of the freight bill. His colleague, Ronnie, who owned a trucking company in Missouri, was nearly destroyed by a factoring company who charged him the full freight bill on top of the fees for factoring. He knew he would have to be very careful if he was to avoid any of these shady companies?
it turned out to be quite easy. All the factoring companies he researched were open about their business practices and very friendly on the phone when he called. Their customer service actually knew things about their company and spoke in nice clear English so he could understand what was being explained. He was quite happy to sign an exclusive contract. In fact, he was quite pleased with the idea of a long-term contract because he knew this was a one-off and he wouldn't have to keep going back and forth to different
companies. He was not charged for a credit check, and in addition he was offered a fuel advance on the pick-up of a load. Many companies offered a non-recourse factoring program that suited him just fine. He was more than happy with the figures he was offered in percentage terms on the freight bills. It was good money.
For Josh it was quite a relief to be dealing with the factoring company. They were more personable than those loan managers at the bank. He was relieved to note that the factoring companies
understood the trucking business and discussed business with him like a respected client, not like someone looking for a handout. The factoring companies were not interested in his credit nor the financial problems his father had experienced in the past. All the factoring company was interest in was the credit of his customers and on their reliability: this worked great for Josh because he and his father had created a very strong and loyal list of clientele over the years. He knew immediately that there would
not be any problems when they were contacted by the factoring company regarding their invoices. His clients wouldn't have any problems, nor would they think poorly of Stewart Trucking, because the factoring companies handle themselves in such a polite and professional manner, similar to the way his father had managed the business in the past.
Josh stepped out of his office to let his secretary know to expect the arrival of the factoring contract shortly. He felt exhilarated by the new possibilities
that would make the future of the company fun again and put the stress of the difficult times behind him. With the capabilities of this new cash flow, Josh could actually expand Stewart Trucking Company further across the country and perhaps even go international into Canada. He was a happy man again knowing that he had just made a decision which would guarantee the success of his business and his sons wouldn't be inheriting a financial mess.
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The key reasons why Truck Companies Employ Factoring Firms.
As the owner of your own firm, you may perhaps be more than aware already of the hardship in making sure that cash flow concerns do not become a predicament down the line. Anyway, the most disappointing thing that can quite possibly take place for your firm is to find yourself swept up in a long and problematic predicament that leaves you forever trying to find the
funds you really need on an continuing basis.
For any type of firm in this condition, the issue can come for waiting for work to clear up and actually be paid out into your balance. Invoices, checks, and the like can take a while to actually to beprocessed which may leave you with momentary cash flow issues. Thank goodness, there are approaches out there for businesses to explore-- and just one of these is factoring providers.
Factoring companies will, in substitution
for your bill of sales, give you with the funds immediately to make sure that you don't have to worry about the waiting period that could make paying the expenses and getting materialsmore troublesome. With this kind of setup, invoice factoring can end up being extraordinarily beneficial for a lot of firms who have to avoid a money ploy which they have gotten themselves in.
Considering that, basing on the scale of the project, it can take up to 60 days for some companies to
get compensated then it's very important to cover your own back and certainly not leave yourself funds short to pay off the monthly bills. After all, how many establishments possess two months income just occupying there to deal with all their bills till they earn?
This is primarily true of trucking firms. They often handle numbers of invoices which means a notable quantity of collection time involves company owner themselves. Making an effort to get paid out in time can
turn into an incredible inconvenience and this is the key reasons why you use trucking factoring agencies who are happy to help out truckers primarily.
As all of us recognize, trucking is an unbelievably huge industry with lots of companies out there hiring hundreds of vehicle drivers. The sad thing is, plenty of these drivers end up in cash predicaments since they are still anticipating work from six weeks earlier to actually compensate them. When this is the case for a truck
firm, turning to factoring agencies for reinforcement may be the most suitable choice left.
This means that a trucking business can pay out the paychecks of the people, keep all the trucks refilled with gas and continue to scale, rise and expand without always waiting for the income which is taking too prolonged to come in. Trucking Enterprises working without a factoring system implemented are leaving themselves at considerable risk, as competitors cash out fast and proceed to
There's absolutely nothing at all to be stressed about when it comes to making use of a Factoring contractor-- they typically aren't like a banking company or somebody who is going to leave you with a substantial pile of liability to repay. You give them authentic invoices from work you have already finished , you are just hastening the repayment process.
In the Usa, where truck agencies prosper, factoring agencies are not considered taking on loan in any capacity.
This confidential contract then allows both parties to make money and indulge in a comfortable future-- it gives the factoring business a guaranteed asset of money to include in the list and it furnishes the trucking company the needed money that they worked hard to acquire.
The trucking firm bestows their statements to the factoring business. The trucking factoring business then take the payments from the trucking company's customers. Factoring has beenaround for centuries and has
been employed for many years by lots of different fields-- but none much more so than truckers. While you might miss out on a small part of the money, something like 1-3 % depending on who you work with, it means that you are acquiring the finances today and can actually start putting the cash to do work.
After all, an IOU or an invoice is definitely not going to cover spendings, is it? For trucking companies when the cash can be great one day and gone the next, it's up to the vehicle
drivers to work prudently and to make sure they are leaving themselves with a significant quantity of time and money to get through the week up until they are handed over once again.
So the next instance your trucking enterprise is enduring some momentary capital troubles and you are putting in a lot of time chasing slow paying customers, why not start thinking about utilizing a factoring companies as a way to get your money and give yourself a more convenient future in the eyes
of your trucking crew and your bank difference?
Traditional Bank Loans
Bank loans are an extremely traditional way for a business to get financing. These loans can be a life-saver, but they're not always available to every business. As an example, a newly formed business may not have the required assets to qualify for a bank loan, and even if they did, it's usual practise for a bank to use the business itself as collateral. This means that if you default on your loan
payment you could lose your entire business. In addition, while you apply for a certain loan amount, that is all the financing you are entitled to. Once the loan is paid off, you can then apply for another loan if the need arises.
What Are Trucking Factoring Companies?
Trucking Factoring companies don't offer loans, and you don't go into debt when you get money from a Trucking Factoring company. Rather the financing you receive from a Trucking Factoring company is based on money your
business has already earned, but have not yet received. Trucking Factoring companies actually purchase your accounts receivable or at least part of them for a percentage of their total worth, Normally around 80%-95%. The amount of money you can receive is based on the amount of money you have earned and the accounts receivable you are willing to ?sell.? Once you have set up Trucking Factoring account it continues as long as you wish it too and the amount of money available to you even can grow as your business
grows, giving you the ready cash you need to meet your own obligations.
Benefits of a Trucking Factoring Company Vs. A Bank Loan
While not every business can take advantage of Trucking Factoring account financing (you have to have a business that has account receivables) for those that can use this type of financing there are several distinct benefits.
1. You Won't Incur Debt. You don't incur debt as you do with a bank loan because the Trucking Factoring company actually
purchases your accounts receivable. One of the main benefits of this kind of financing is that your business credit rating and your personal credit rating won't be affected. In the event that your business fails, you wouldn't have to be concerned about someone coming after your personal or your business assets in order to pay off a loan. The debt goes onto your credit report with a bank loan, with only one missed payment adversely affecting your business credit: it would also affect your ability to secure insurance,
and may reflect on your personal credit rating as well.
2. There's no collateral required. Another benefit of using a Trucking Factoring company instead of a traditional loan is that you aren't required to provide collateral to the Trucking Factoring company in order to secure financing, because the company ?buys? the accounts receivables; not loans you money based on them. In addition, while the Trucking Factoring company does run a credit check on your customers whose accounts receivables are
offered for financing, the state of your credit is not an issue. This makes it easier for fledgling businesses to get the financing they need through a Trucking Factoring company (as long as their accounts receivables are in good order) then from a bank, who may not feel that you have been in business long enough to be worth the risk of issuing you a loan.
3. You'll receive the money faster. With a Trucking Factoring company you can actually get the money you need faster. The money will normally
be in your account within 24 hours, once the Trucking Factoring company is confident that your customers? accounts are likely to be paid. With a bank, there are vast amounts of paperwork, then the loan has to be underwritten, which can take months before you actually see the loan if it is approved.
4.Interest is Paid Up Front. With a bank loan interest continues to build, and this has to be paid the whole time you have a business loan; however with a Trucking Factoring company there is no interest
- they take it right off the top by deducting it from the total amount of receivable accounts. So you don't have to worry about monthly loan repayments, and you don't have to worry about the amount of interest payable, because all the money in the account is yours to spend.
As you can see, there are several benefits that makes considering financing through a Trucking Factoring company over a traditional bank worthwhile. However, there are also a couple of other benefits that a factory company can
offer your business is far beyond the scope of the bank. The main benefit is that once you've sold your accounts receivable to the Trucking Factoring company, you are free from having to collect money owed by your customers. The Trucking Factoring company takes over that chore, since it is now their money to collect. Trucking Factoring companies are very efficient at debt collecting, and this frees up your valuable time to devote to running your company.
In addition, since the Trucking Factoring company
evaluates the credit quality of your customers prior to purchasing the accounts receivable you gain valuable information into which customers are likely to pay and which ones are not so likely to pay.A Trucking Factoring company is not the only method of gaining access to finance for the running and growing of your business, however it does offer a financing option well worth considering.