Why use a trucking factoring company vs a general service?

December 20, 2022

Do you own a trucking or freight business? Chances are that you’re always looking for ways to save money, improve your cash flow, and maximize the profitability of every job. When you rely on the services of an experienced trucking factoring company, you get a trusted partner to help you achieve your goals.

While you could opt for a general service provider, there are several distinct advantages to partnering with industry professionals specifically trained in the needs of the shipping and hauling industry. Keep reading to learn how utilizing a reputable trucking factoring company benefits your business.

What is a factoring company?

A factoring company is any enterprise that purchases unpaid invoices from businesses for a percentage of the total amount due. They’re often utilized by brands working in industries with narrow margins that rely on consistent cash flow.

Most invoices have 30 to 60-day due dates, leaving many small businesses profitable but unpaid. Working with a factoring company eliminates the stress and uncertainty of waiting for clients to settle their invoices.

General factoring services provide payment within 24 hours to industries such as:

  • Fashion
  • Manufacturing
  • Staffing

Because of the number of challenges in trucking and freight, some factoring companies specialize in working with these industries, offering advantages for businesses that choose to work with them.

Huge truck in the evening glow

What are the benefits of using a trucking factoring company?

Freight factoring, also known as trucking factoring, takes the invoices for the loads a company runs and enables payment within 24 hours instead of waiting up to 90 days.

A company or owner-operator makes their delivery as usual. Then, they sell the invoice for the job to a third-party company for slightly less than the total amount due. While they get paid a little less than the value of the job, many trucking businesses find it worthwhile to have predictable cash flow in their business.

For companies with high-earning clients who are slow to pay their invoices, a specialized factoring company can eliminate the downsides of the account.

Specialized factoring companies understand the trucking and freight industry and expedite the process of delivering funds for sold invoices. In an industry with narrow margins and high-demand jobs, a specialized factoring company can provide consistency, support, and funding to scale your business without taking on additional debt at high-interest rates.

Freight Containers on a Ship

When should you use a factoring company versus a small business loan?

Small business loans require you to leverage your assets for new capital, such as equipment, property, or inventory. Payment terms range from 10 to 25 years, including the principal amount borrowed and accrued interest.

Using a small business loan can end up costing a company thousands more for the privilege of accessing capital.

Factoring provides instant cash flow without repayment terms or interest. The company simply takes a percentage of the invoice amount when it’s paid, without risk or stress for the trucking or freight company. It’s not a solution for purchasing new vehicles or making other substantial investments in your business, but a way to eliminate unpredictability in your operation.

BP Financing is a trucking factoring companies support small businesses to maintain reliable cash flow.

We focus on accounts receivable financing to provide our clients with payment within 24 hours instead of waiting 30 to 90 days. As a small or medium-sized business, waiting for the full term of an invoice can create unnecessary strain on your operation and stress for you as an owner.

When you build a partnership with a trucking factory company, you get someone on your side. Improve cash flow and establish a consistent work routine, regardless of how long it takes for clients to pay for your invoice.

With less stringent requirements than traditional loans, BP Financing is a valuable resource for small business owners. Get in touch to learn how factoring can help you.

Image of trucks dropping loads before they get paid from a trucking factoring company.