Factoring Can Turn Your Financial Situation Around
There are different issues that can affect the funding for and overall financial status of your trucking company. Such factors may be either in the external or internal environment. Here are just a few:
Economic Issues
All industries are at the whim of the broader economy, especially the trucking industry.
The trucking industry is deeply intertwined with just about every U.S. industry that requires transportation (which is just about every industry), and an imbalance in any sector of the economy can have palpable ramifications in the trucking industry. Things like rising fuel costs and higher cost of materials and equipment hinder the growth of your trucking company. Oil shortages and potential trade tariffs are always threatening to hike up the cost of transportation, and the trucking industry always bears the brunt of these economic circumstances.
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Political Issues
Politics, too, can impact the trucking industry. Trade policy, tariffs and embargos can greatly change the price of operating a trucking company. How the United States interacts with other countries makes a great difference in prices over almost every domestic commodity, due to the interconnectedness of markets worldwide.
Slow-Paying Clients
Customers that are slow-paying or fail to pay according to your contract are another element that can be a burden to your trucking business. If your clients fail to pay their invoices, then your firm will fail to make a profit and lose money from past shipments.
Slow-paying clients are the perhaps the foremost problem for owner-operators and small trucking companies. Even if a client pays on time, it usually takes weeks or months for the payment to come in and for the trucking company to have access to the funds. That is a huge problem– how can you take on new clients while waiting to collect on the capital that you have earned? Long payment periods make it tough to get a foothold in the industry.
Financing Methods
Credit cards and loans stand as a method of financing when a company hits hard times in acquiring cash. These funding techniques may be considered for your firm, but your firm may not be considered an eligible candidate for approval. This is due to strict terms that require a firm to have capital and collateral to pay financial institutions back, along with high interest rates.
And what startup trucking company/owner-operator has that kind of credit history? It simply isn’t practical– most are unproven as they get their start, and that is okay. One shouldn’t be punished or denied a loan because he/she doesn’t have a perfect credit score or the financial assets to back his/her ambitions. Those are standards that are impossible to live up to, and even if by some stroke of luck you qualify for a bank loan, you are left with a ton of debt and a steep interest rate.
Trucking Factoring Provides Results
Though these are issues that your firm can run into, one viable solution exists to fix your cash flow problems: Factoring can bypass the different problems that occur due to external and internal problems by purchasing your unpaid invoices. And it’s done without having to worry about past performance or your firm’s credit history. Rather, it is the credit history of your debtors which matter. Lets take a quick look at the invoice factoring procedure:
Step One– You submit your outstanding invoice(s) to a transportation factoring specialist. They will review your application and the credit history of your debtors, and will get back to you within 24 hours.
Step Two– The invoice factoring company provides you the lion’s share of your invoice, keeping a fraction in a reserve account until your debtor has paid the invoice, in full, to the factoring company.
Step Three– Once your debtor has fully paid the invoice factoring company the entire balance of the invoice, the factoring company pays you the remaining money held in their reserves, minus a small factoring fee.
Throughout the entire process, your business avoids incurring even a single penny of debt. You also sidestep the burden of having to hound your debtors for payments– the invoice factoring company assumes that responsibility. Factoring companies are experts when it comes to professionalism and customer satisfaction, so you can trust them when it comes to relations with your clients. Your clients will have a pleasant experience working with the invoice factoring company.
So, no matter what financial problems your trucking firm is experiencing, if you have invoices to sell, we can help you access the funding you need today!
