Freight Bill Factoring: A Trucker’s Dream
A trucking company is a very profitable racket however there are some hurdles and considerations that have to be overcome. These obstacles almost always revolve around the inability to wait for freight bills to be paid in order to continue with day-to-day operations of the company. Transportation offers a great income but also is a great way to soak up a lot of working capital fast. The fuel expenses are overwhelming alone without adding extra expenses such as labor, repair and maintenance as well as various other expenses that are incurred by those in the trucking industry. Most customers pay the freight bill after 30 or 60 days. That is a significant period to suffer through and continue working when there is no available cash flow. Freight bill factoring offers the ease of convenience by purchasing existing freight bills in order to provide immediate cash to any trucking company.
This is the most common challenge of most trucking or logistics companies. Expenses such as fuel, repairs and drivers can’t wait until freight bills are paid and require available finances right now. The typical rule of thumb in this industry is that the goods need to be delivered quickly and the customers pay very slowly. This creates problems for any well-run company and with the modern option of freight bill factoring, provides a reasonable financial solution. Many trucking companies will seek financial assistance from their banks and come away feeling depressed and defeated. Banks seldom give business loans to new trucking companies or small companies. When bank loans are not an option, freight bill factoring is an option and a good option.
Many trucking companies actually see freight bill factoring as a better solution than seeking out financial assistance from their banks. The reason for this is quite clear. Freight bill factoring gives the company financing that is required to meet their needs and continue operating. Every trucking company knows that the secret to growing a successful company is having the ability to grow. The opportunity to grow is directly related the amount of working capital that can be freed and made available to that trucking company. The best part about freight bill factoring is that it can be set up in just a couple of days unlike most traditional banking institutions. The freight bill factoring company purchases the freight bills from the trucking company and waits for the payment.
The cost of factoring is relatively low especially for the type of financing that is offered. The various freight bill factoring companies have unique rates but are usually within 1.5-3.5% per 30 days. Freight bills that have a longer transaction time such as a 60 day period will incur a slightly higher rate than the 30 day transaction period. There are many determining factors to utilizing a freight bill factoring company to meet financial requirements. Freight bill factoring offers any trucking company the financing required to expand and prosper.
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