Running a trucking company isn’t easy, and it’s only gotten more difficult with the worldwide supply chain issues we’re collectively facing. That’s why it’s important to have helpful partnerships, and one such partnership that many owners are turning to is freight factoring companies.
Freight factoring allows you to quickly receive payments on unpaid invoices, and more trucking companies are turning to this service to improve their cash flow. As the service has grown in popularity, we’ve seen different companies use it in different ways, so we’ve gathered some of the top strategies to help you get the most out of your partnership.
Freight factoring company strategies
Don’t do all invoices
While some freight factoring companies require a minimum number of invoices to access their service, if possible, try to avoid making this the only method of funding your business. The ability to get paid quickly is convenient, but that convenience comes at a price in the form of a percentage of the invoices you send. So rather than giving away money on every invoice, use freight factoring to manage cash flow while still waiting on payments from your customers for other invoices.
Bypass issues with bad credit
Most sources of financing, such as credit cards or business loans, require a credit check to qualify. If your company has a bad credit score or no credit history, securing that funding is next to impossible. However, that’s not a problem with freight factoring. The company isn’t supplying you with money based on your credit. Instead, it’s based on the unpaid invoice. That means you can use them to get cash on hand regardless of the company’s credit.
Use them to invest in your business
Companies that have a steady book of business but must constantly wait on their customers’ payments can be financially secure but still not have the cash available for significant investments in the business. For example, they could be doing well on the books but still be unable to invest in a new truck to grow the business. By using freight factoring, they can quickly get the cash needed to make the investment without having to wait for customers to finally pay.
Focus on essential business tasks
Managing the accounting for a trucking company is no simple task. Between running credit checks on clients and trying to collect payments from different sources, it can take up a lot of a person’s time. One of the benefits of working with a factoring company is that they can manage these stresses on your behalf, essentially serving as your back office so you can focus on running and growing your business.
Avoid taking on new debts
Emergencies can arise even for the most seasoned trucking company owners, and when it happens, it often requires cash to fix. In the past, if the company didn’t have the cash flow to cover the costs, it would have to take out a loan, leading to repayments on the initial loan and the interest. If you take advantage of freight factoring, though, you can quickly get the necessary cash without adding any debt to your books.
Start taking advantage of freight factoring!
Here at BP Financing, we make it easier for you to access the cash you’re owed. As a member of the International Factoring Association, we tend to focus primarily on accounts receivable financing. That means you’ll get your money within the next 24 hours rather than having to wait 30 to 45 days. Learn more about the different services we offer, or get in touch today to set up an initial consultation.