Most of us know that trucking companies are one of the most important aspects to keeping the national economy moving. Just about every product purchased by a consumer is moved at some point by a transport company. Many of the trucking outfits are smaller companies grasping the opportunity to run with the big dogs. This seems like a great business model until it comes time to pay the bills for fuel and labor. What most consumers do not realize is that the folks that provided the transport of the product they purchased still have not been paid for the service when the product is sold to the consumer. This brings up the need for truck factoring which is a cash flow tools used by transportation companies.
Truck factoring or freight bill factoring is the process of a company selling the invoice for immediate cash to a transportation industry factoring company. This allows the trucking company to receive up to 99% of the invoice total the day the factoring firm is provided the signed bill of lading or proof of delivery. This is a major cash flow tool as it allows the truck company to have the funds up to 45 days sooner than waiting for the terms of sale which are typically 30 to 45 days. The transportation and trucking industry is a very cash intensive industry with the cost of fuel on the rise and the truck drivers need to be paid as well. They also need to keep up with all the extra fees from uncle same and insurance.
Often truck factoring becomes a way of business for the trucking company. They submit invoices weekly to the factoring company to get the cash back in the business much quicker. The cost of truck factoring can range from .59% to 5%, depending on how much business your trucking company generates and the credit quality of your customers. It also depends greatly on which factoring company you use as the fees can very by 90% depending on who you decide to do business with. This makes the factoring evalutation critical to finding the best fit for the trucking business. It often makes sense to use the services of a factoring broker to find the best overall price and solution for your trucking company. The factoring broker can look at several possible solutions that fit best for your transportation company and typically this does not cost the trucking company anything.
Truck and transport factoring provide a great option for the companies that keep our economy moving forward. In the transportation industry moving freight means waiting for your payments. Invoice factoring means getting paid when you complete the job and eliminating the wait for payments.
