All businesses require some form of financing, no matter what development stage they are in. In the trucking industry, invoice factoring — also known as transportation factoring — helps you maintain positive cash flow to handle day-to-day operating expenses and to accelerate growth. A trucking business that uses ongoing financing as part of its financial strategy signals strength and stability rather than weakness.
Factoring Improves Customer Relationships
One of the greatest concerns owners face when it comes to employing invoice factoring is how it will affect their customer relationships. A company that routinely uses transportation factoring is more likely than not to be recognized as healthy because it cares about maintaining positive cash flow. Through factoring, customers continue to give you their business because you are able to offer reliable delivery time and again.
Successful trucking businesses grow by serving their customers and managing those customers’ perceptions. One of the keys to maintaining healthy, positive relationships is to offer service even while waiting for payment from previous jobs. Transportation factoring allows you to capitalize on outstanding invoices while still delivering service to customers who have yet to pay.
The Many Benefits of Transportation Factoring
The benefits of invoice factoring apply both to your trucking company and to your customers. If your customers are larger firms, they will have likely worked with factoring before. They understand that factoring companies are well-versed in accounts receivable processes and have years of experience in collections management. Intimate knowledge of transportation factoring and invoice processing allows for factoring companies to take on the job of collections which in turn improves the flow of documentation, clarifies information, and makes for quick and easy resolution of disputes — all of which any customer loves to see.
Here’s how it works. When you factor your invoices through a trusted partner such as Accutrac Capital, you deliver your freight as normal, but instead of sending your invoice documents straight to your customer, you instead send it to the factoring company, who will pay you a generous advance right away — often the same day you apply. You’ll receive up to 97% of the invoice minus a small factoring fee, and the other 3% will be held in reserve until eventual collection of the invoice. Visit the Accutrac site for FAQs about factoring for transportation companies and qualification details, as well as a more precise description of the process.
Finding the Right Partner
It should go without saying that choosing the right factoring company is a vital decision. Make sure to find a factoring partner that is not overly aggressive in their collection; also make sure that your factoring partner thoroughly understands the complexities of your industry — trucking and transportation hurdles are unique, after all. Finally, be sure that your factoring partner manages their collection duties effectively and with discretion.
Freight factoring with a reputable partner comes with numerous benefits including:
- Immediate access to funds
- Professional Accounts Receivable Management
- Risk Management, and
- Total Transparency
A solid factoring company will provide simple and convenient funding services and will come with a bevvy of cost saving valued added services, which may include:
- Preferred Currency Exchange Rates
- Cash Advance B4 Delivery
- Discount Fuel Cards
- Equipment Financing
With some customers taking up to three months to pay, many carriers and owner-operators in the trucking and transportation industry are simply not financially prepared to handle the wait. With the financial support provided by invoice factoring, businesses can find the relief they need to focus on stability and growth.