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Medium-Size freight brokerage businesses, specifically those who have not been around for extremely long, will commonly find it challenging to protect a loan. Banks are commonly hesitant to lend cash to businesses that don't have a great deal of income and possessions. They also want evidence of the viability of a company and thus need that a lot of operations, specifically little ones, been around for a particular amount of time prior to they want to turn over any cash. Due to the fact that of this, a medium-size business frequently has a couple of money producing alternatives when needs occur. One option readily available, however often neglected, is invoice factoring. This is an outstanding method for a medium-size business to acquire cash.
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A Freight�Factoring Company Instead Of A Typical Bank Financing
Exactly how to Increase Money Flow Without Loaning -Cash Money flow is among the primary reasons companies fail.
At one time or another, every business, even effective ones, have actually experienced bad cash flow.
Money flow does not have to be a problem any more. Do not be deceived -- banks are not the only places you can get financing. Other options are offered and you do not have to borrow money. Exactly what is truck factoring ? One solution is called oilfield factoring companies. Truck Factoring is the process of selling invoices to a financier instead of waiting to collect the cash from the
customer. Oh, the Irony- Trucking factoring has an ironic difference:
It is the monetary
foundation of many of America's most effective companies. Why is this paradoxical ? Since truck factoring is not taught in business colleges, is seldom mentioned in business strategies and is fairly unknown to the majority of most of American company people.
Yet it is a monetary process that frees billions of dollars every year, enabling thousands of companies to grow and succeed. Receivable Loan Financing has actually been around for countless years. Invoice Factoring Companies are financiers who pay money for the right to receive the future payments on your invoices. An overdue receivable or invoice has value. It is a debt your client has actually to pay in the near future. Factoring Principals--Although factoring
offers solely with business-to-business deals, a large portion of the retail business uses a factoring principal. MasterCard, Visa, and American Express all use a form of factoring in their retail transactions. Using the purest definition of the word, these big consumer finance companies are truly simply large Receivable Financing Companies of consumer paper. Consider it: You make a purchase at Sears and charge
it to your MasterCard. The store gets paid almost immediately, even though you do not pay until you are ready.
For this service, the charge card company charges Sears a charge (typical common normal fees vary from 2 to 4 percent of the sale). The Benefits Trucking Factoring can provide many benefits to cash-hungry business. Rather than wait 30, 60, 90 days or longer for payment on a product that has currently been provided, a business can factor
(sell) its receivables for cash at a little discount
off the amount of
the invoice. Payroll, advertising efforts, and working capital are simply a few of the company requirements that can be satisfied with instant cash.
Oilfield Factoring Companies offers the means for a manufacturer to replenish stock and make even more items to sell: There is no longer a requirement to wait for earlier sales to be paid. FACTORING is not simply a money management tool for producers: Practically any kind company can take advantage of Receivable Loan Financing. Generally, a company that extends credit
will have 10 to 20 percent
of its annual sales tied up in accounts receivable at any given time. Think for a moment about how much is bound in 60 days' worth of invoices: You can not pay the power expense or this week s payroll with a customer s invoice, however you can sell that invoice for the cash to meet those responsibilities. Using trucking factoring companies is a fast and simple process. The factor purchases the invoice at a price cut, typically a few percentage
points less than the stated value of the invoice.
Please call our freight bill factoring specialists at 1 - 888-239-9162
or E-mail Us
The American Trucking Organization
specifies that there are about
195,000 work with transportation
300,000 personal service providers trucking
firms accredited to
run in the States that transported,
according to their newest listings of millions of
products, supplies and
fundamental materials .
There are numerous usual
teams on our nation
roads transferring these
vital items to our
shops, manufacturing facilities and ports.
Plusfreight invoice factoring
many of them and offer their
receivables financing services
including the following states.
Alaska, Arizona, Arkansas,
California, Colorado, Connecticut, Delaware,Florida,
Georgia, Hawaii, Idaho State,Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,
Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska,
Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina,
North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina,
South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia,
Wisconsin, and Wyoming
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Wagner Truck & Haul have been operating their business since the mid 1980s. They've delivered goods for nearly every major industry in the nation and for 20 plus years, business was booming as they've traversed the country in all weather for all clients. During the boom times from 2002 to 2007 Wagner Truck & Haul was the mastermind of a top-rated accounts receivable in the trucking industry. Very few customers were behind on their bills, and those customers who were late turned in their overdue payments within an acceptable time frame. Cash was flowing and times were good for all.It was just one year later, in 2008, when the economy in the United States took a sharp decline, and both large and small businesses started to notice the squeeze on their pocketbooks: everyone had suddenly gone silent. Business slowed down. Worse still, it was noticed by Wagner in early 2008 that even though most of their loyal customers were on time with their payments, there were a few late bloomers who were starting to spread the disease. And as spring turmed to summer and summer into the early days of fall, Wesley Pearson, CEO of Wagner felt a chill go down his spine whenever he would look at the weekly A/R reports. There was a growing list of clients who now owed them back debt.He had gone to his administrators and asked them what the problem had been. Were they doing something wrong or different when it came to reaching out to delinquent accounts? By his bookkeepers records, this wasn't the case. He thought perhaps that he was losing clients to a competitor who offered rock-bottom prices with little to no guarantee of quality performance, and that the folks who owed Wagner money had jumped ship and decided to leave him holding the bag.
. They couldn't afford to pay him their debt, but they could afford a lesser service, maybe. But after doing the cursory research for this and talking to friends in the field, he found that alas, no, customers of Wagner hadn't gone elsewhere. The had just gone!.This current state-of-affairs was causing Wesley Pearson to have some very restless nights. There were goods to ship, employees to pay, trucks to repair and maintain, and continuous overheads that were very extensive when compared to the funds (or lack of) that were incoming. After work he would confide in his wife, Dolores, and neither were unable to stop the constant worry over the lack of funds.""Lin, I have a really bad feeling,"" he would say with deep woe.""Well, what do you think it is?"" she would say.Wesley would stare off for a moment and then close eyes. He could see the fleet of trucks he had purchased over the years. He could see them traveling, bringing goods to all of his clients. But somewhere, a haze would form over his fleet and the vast number of vehicles would disappear to but a few. What could cause this ultimate death spiral of business?""I know what it is,"" said Wesley. ""For way too long I've been relying solely on profits received from invoices. For too long I've been allowing our clients to let their accounts become overdue."" Dolores would look at her husband lovingly, and holding his hand would say 'It's such a harsh economy these days and our clients must be having difficulty meeting their responsibilities'.""Wesley knew his wife meant well, but he knew that he was responsible for too many people to sit idly by, waiting for the sun to peak over the clouds.The following day Wesley walked into his office with a spring in his step, determined to call each and every client who owed money to Wagner Truck & Haul. This wasn't really a very efficient way for a Chief Executive to spend his day, and Wesley knew he should be overseeing all the other sides of the business, such as shipments and deliveries, approaching prospective customers, or working with his sales team. Even though he was doing something to help his company, he knew he had folks on salary to do just this thing. A waste of time - a waste of money - he had the best intentions, but all the while Wesley was realising just how much trouble he was in.Poor Wesley spent the whole morning trying in vain to contact his debtors: they promised to call back, dodged his calls, or made small interest-only payments. He was beginning to feel quite despaired when his secretary knocked on his door.
""Wesley, can I have a word?"" she queried, standing in the doorway.
""Of course Geraldine, please come in."" Wesley relaxed back into his chair and looked up at Geraldineerley.""Well, I did a little searching this afternoon and tried to figure out a way out of this mess Wesley."" She opened up a folder she had been carrying and pulled out a small wad of papers, placing them on the desk in front of him.""Have you ever heard of factoring?"" Geraldineerley asked.""It sounds vaguely familiar. What is it?"" he said.""Well,"" she began, ""It�s actually quite simple really.
Basically, factoring invoices means that we would get paid immediately for the loads we haul.""""Immediately?"" Wesley interrupted.""Yes, immediately,"" she continued, ""In a nutshell, it's pretty easy. We start by having a professional account manager review our figures and help us set up a company profile. Included in the profile would be the investigation of our accounts receivable aging reports, our current customers' credit limits etc.. In addition, factoring will assist in determining our customers' creditworthiness, independent from their credit relationship with our company. It�s a broad view.��I see,� Wesley said. �And then what?��Well, after their review, and we�re approved for a factoring contract, we can negotiate terms and conditions. You'll be surprised at the amount of flexibility, all dependent upon the credit histories and business volume.
This company tells us what the cost will be to purchase factoring for our accounts receivable. Once we arrive at a mutual agreement, the funding begins.�Wesley leaned forward and reviewed the paperwork closely.""I don't know, Geraldine - it just sounds too good to be true"", Wesley said quietly.""Yes, I know; that's exactly what I thought at the beginning. But think about it, Wesley: they've guaranteed that experts will do all the paperwork, and that will free us up to do what we should be doing - focusing on our customers in good standing, and that kind of stuff. They appear to be very flexible, Wesley,"" she underlined a paragraph on the paper before him.""Just how flexible?"" he asked.""They personalize the factoring rates so that the amount they are willing to take on is commensurate with our needs and our client�s debt. It only takes 2 to 4 days for this to be figured out. """"That sounds pretty good, seeing as we tapped ourselves out with bank loans last year to repair the fleet and money sure is tight. It's imperative that we keep the business rolling as usual, and every day we go unpaid we're getting closer and closer to dealing with some serious issues in both the short term and the long term,"" Wesley said.Wesley took in a long slow breath, then looked at his secretary with something like hope in his eyes.""Precisely�. This could very well be the answer to resolving the problems we're having with these clients who still owe us money.""Wesley thought about this and agreed with Geraldineerley. The customers who were in debt to Wagner Truck & Haul were professional resources of the company, but they were also long-standing friends. Wesley wasn't prepared to lose these relationships just because they were having financial issues at the moment. Wesley knew only too well that the whole economy was floundering, and that it was not going to change overnight. That unknown amount of time could create a disaster situation for both of them if he wasn't careful in how these debtors were handled. Of course he didn't want to lose any more money, but he didn't want to lose business either.""Let me go over this tonight Geraldine, and thankyou."" Geraldine nodded, stood up and left the office feeling that she had helped her employer keep on his shirt and hers too.Wesley sat behind his desk and looked over the details Geraldine had not mentioned in their meeting. What other issues could freight factoring help Wagner with? With his pencil gliding down the sheet he noticed that the factoring company could help fray the cost of fuel with fuel discount cards and fuel advances. In fact, Wagner could receive up to fifty-percent cash advances upon load pick-ups. As a man who hated binding contracts with no room to breathe, he was pleased to see that this factoring company would not make him sign a long term contract, would not make him pay any sign up fees and there was no minimum volume required.""I must tell Daniel the good news,"" muttered Wesley to himself.Daniel is Wesley's son-in-law, and he really admired the ideas behind Wagner, so much so that only two years before he had started his own transportation service business. Wesley knew then what struggles Daniel would face but he encouraged him nonetheless. With the economy the way it was, if an established company such as Wagner was struggling then the little guys, like Daniel, were going to be in even more trouble. But, an antidote may have been found in freight factoring and Wesley was soon to find out.A few short months later, after completing the application process, having the legal experts review his credit history, accounts receivable, and statements, finally Wesley was beginning to find his way out of the hole his debtors had created for him.They took on reasonable factoring purchase contracts and stopped spending their precious man hours scrambling to collect debt. They used that time to refocus their efforts in being competitive in new territories. Wesley looked back on the dismal months of life before freight factoring and almost shuddered at the thought. He probably wouldn't be in business today had he not learned just in time about freight factoring.
More Trucking Factoring Companies Story Articles
Factoring in the Future of a Trucking Business: A Story The phone was ringing on his desk, and Sam Lawrence just sat there letting it ring. He let his morning coffee cool and left his cigarette to ash itself in the tray, because he is trying to make the biggest decision ever for his trucking company. Lawrence Trucking Company was at a turning point of growth and Sam had to decide if signing with a factoring company was the right way forward.
More than forty years ago Sam's father had started this business working as an owner-operator and eventually growing Lawrence Trucking Company into a fifteen trailer fleet. There had been some hard times when it seemed everything was going to go under and even Sam�s mother strapped herself into a cab to make hauls. His father had worked long enough to see the price of hires drop dramatically during the recession and to see the explosion of fuel prices afterwards. But now things were different: the company was in Sam's hands and he needed to ensure that this business would be left in great shape for his sons.
To move Lawrence Trucking Company ahead into the future, he needed a steady cash flow but there was just not enough money to go around. He had employees to pay. They had families and household bills too. A few of the refrigerated trailers really needed some maintenance, and in order to stay competitive he really wanted to invest in specialized haulers to meet the increasing requests for loads of agricultural and energy equipment. He knew that turning down these requests made Lawrence Trucking look inefficient and weak in what was currently a strong market.
His father would have told him to wait and to take his time adding on new technology. Sam chuckled, thinking about his father. His father had been against placing GPS units in the cabs. His Dad would say ""Why on earth do you need some stranger telling you to get off the exit that everyone knows has been there for years?� He smiled to himself as he remembered his father poking fun at the other drivers who switched to automatic, even though automatic was quite obviously more efficient (though less manly). His father days were long gone and technology was actually an important improvement for the business such as having Qualcomm to cut down on fruitless time communicating on the phone for bills of lading.
Sam knew he was right in his forward thinking. How would he take Lawrence Trucking to the next level? More importantly, how could he afford it? Business funding was tied up in fuel bills and the mortgage for the garage and office. He just finished paying off the small bank loan for installing satellite radio in the trucks for the guys.
But was factoring the answer? If he was being honest, he didn't really understand how it all worked. It sounded a lot like ninth grade algebra which just didn�t feel like it belonged as part of the trucking business. Factoring companies buy your invoices and manage your accounts receivable for a certain percentage of the invoiced amount. In return, the factoring company pays the trucking business straight away, providing immediate cash flow for the business to pay staff, purchase fuel, and do any repairs or maintenance. Without this assistance, you're placed in the position of waiting for payment from your customers, and this can often be thirty days, or more. In those 30 days, a trucking company can�t pay its bills and employees in invoices.
Sam had to really consider what his next step was going to be. Sam had heard that there were companies that charged for same day money transfers and would only advance a percentage of the money owed to your company while holding the rest in a private account if they didn�t get their bill payment within 60 or so days. Plus it was worse still if the customer didn�t pay up at all because then the factoring company would take it right out of the money supposed to be coming to you! Through the grapevine, he�d also heard about how some companies suddenly slipped you onto a sliding scale of percentages even if you had already signed a lengthy contract for maybe 3% or 7% so there you are with 10% coming as a cost to you out of the freight bill. His friend Ronnie who had a trucking business in Missouri, was run nearly into the ground by a factoring company that charged him the full freight bill on top of the factoring fees. Well, what was the point of going to a factoring company if there was shady business like that going on?
But it turned out to be quite easy. When he called the factoring companies he discovered they were very open about their business practices, and very friendly and helpful. Customer service appeared to understand their company and explained in clear, concise English exactly how it all worked. He didn�t mind signing an exclusive contract. In fact, he was quite pleased with the idea of a long-term contract because he knew this was a one-off and he wouldn't have to keep going back and forth to different companies. He was not charged for a credit check, and in addition he was offered a fuel advance on the pick-up of a load. In fact there were a few companies who offered him a non-recourse factoring program, and this was exactly what he had been hoping for. Also he was happy to hear how much he was offered in terms of percentages on the freight bills. It was good money.
For Sam it was quite a relief to be dealing with the factoring company. They were extremely helpful and more personable than the bank staff. He was relieved to note that the factoring companies understood the trucking business and discussed business with him like a respected client, not like someone looking for a handout. The factoring companies were not interested in his credit nor the financial problems his father had experienced in the past. Factoring was based on the credit of his customers and on their reliability which worked well for Sam because he and his father had built up good strong relationships over decades with their list of clients. He knew immediately that there would not be any problems when they were contacted by the factoring company regarding their invoices. His clients wouldn't have any problems, nor would they think poorly of Lawrence Trucking, because the factoring companies handle themselves in such a polite and professional manner, similar to the way his father had managed the business in the past.
Sam stepped out of his office to let his secretary know to expect the arrival of the factoring contract shortly. He felt exhilarated by the new possibilities that would make the future of the company fun again and put the stress of the difficult times behind him. He suddenly realized that, with this new cash flow, he could actually expand Lawrence Trucking Company and who knows, move into Canada, which had always been his dream. His heart felt full knowing his sons wouldn�t have to worry about money because of the right decisions he had made for their trucking business.
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�So, this is not a loan?� Henry Flores asked as he leaned back in his chair, crossing his legs. The woman who sat across the desk smiled and shook her head.�No, not exactly,� she said.Henry Flores owned a small trucking company, and his business had recently fallen on difficult times. Certainly the trucking business can be an extremely profitable venture, and for many years it had been that way for Roberto. He named his business Tucker Trucking, named after Lance and Vincent, his two grandfathers. Both of these men had been very hardworking and had set a great example for Roberto.Six months ago disaster struck Roberto's business when two out of his fleet of fifteen trucks were taken off the road.
One was a roll-over and ended up in the trucking graveyard: the other was involved in a serious and costly accident. The financial security of Roberto's company relied on his full fleet on fifteen being on the road, and missing two trucks was just devastating . In addition, he just didn't have the available cash to buy a new truck, plus repair the other one.Paying of bills in the trucking industry is always a major cause for concern for businesses.
Waiting a month or longer for bills to be paid was quite normal. In the long run, this wasn�t an issue, but if problems arose, you could find yourself in trouble.Henry wasn�t a bad owner, and he hadn�t messed up. Certain events had occurred that he couldn't possibly have predicted, and now he had to find a way to protect his business and prevent it from ultimate devastation.That�s where the woman across the desk came in. Her name was Eva and she worked for a factoring company. Henry had come across her company as he sat in his office late one night, pouring over the internet for some solution to his problem long after his employees had gone home.Eva explained. �it is really not a loan at all: we actually buy your accounts receivable. We're not giving you finance to be repaid later: we're purchasing something from you, and when you can you can buy it back. That way we�re protected from a complete loss, but you�re protected from the outrageous fees you would find in a loan from the bank.Henry nodded. It sounded perfect - perhaps too good?.Eva laughed. �I'm not sure that you believe me,� she said.�No, I do, I just think it sounds a bit too good to be true. I actually thought I might end up losing my business.�Eva smiled, agreeing. �Yes, we get a lot of that. There's no way we want to see you lose your business. We know how hard you work, and that you've invested everything in your business. We all need help sometimes. That's why we do what we do.��Well, I'm very grateful that you came to see me today.��No problem - I'm just down the road. We normally do it all online but I was happy to come and visit you today,� Eva said with a smile. �Let's work out a solution to your problem.�And right there and then they created a business profile. Henry completed the form, with Eva offering advice as needed.
The completed profile gave Eva and her company all the information they needed on Roberto's business, and with this information they would determine if this business would in fact be suitable for Factoring. Unfortunately, not all companies are. Some were beyond factoring special brand of help, and sometimes things weren�t even dire enough for it. As Henry completed his form, Eva listened to his story and she felt quite sure he would be the ideal candidate for Factoring.Eva took the completed form and placed it in her briefcase. Standing up, she reached over the desk and shook Roberto's hand. He stood before they shook as well, and then smiled. They said their goodbyes and Henry walked her to the door, and then returned to his office.All his staff members were there, all seven who worked in his office. Sitting behind his desk once more he could hear the familiar sounds of his office workers going about their daily business.He leaned back and closed his eyes. He had felt so helpless lately, was sure the whole thing was collapsing, and would take him with it. Talking to Eva though, learning about factoring, it felt like a weight had been lifted from his shoulders. He sat back in his chair and ran a hand through his graying but still thick black hair.All those long, sleepless nights. The terrifying panic attacks that occurred regardless of where he was. He could feel it all fading away. He knew it wasn't over yet and that there was still a way to go, but he could just feel everything start to change for him. He was still here; he knew this was the right path for him, and he felt proud that he had taken the appropriate steps to sort out his problems.His mind wandered back to the very beginning, when he first started his business. He had opened a restaurant at age twenty two when he was fresh out of school. It had been really successful. Offering home cooking in his own hometown, his business had really prospered.But he had gotten bored. His passion didn�t lie with the food industry. He thought long and hard, and then he decided to sell the restaurant. He took six months off, and during that time he decided to create Tucker Trucking. And that's exactly what he did. For the second time in his short life he created a company from the ground up. He had been successful.Then disaster! The two trucks went down and suddenly his success wasn't looking so guaranteed. He was nearing fifty. He was concerned that he just didn't have the energy left to try and save the business. But giving up wasn't part of his personality either.
The idea of cutting his losses, shutting down, laying off his workers, it actually made him sick some nights. He didn't want to quit - both for himself and for his staff members.And now, because of factoring, he was sure he wouldn�t have to. Henry opened his eyes, sat forward, turned his computer on. He had things to do. There would be plenty of time later to be thankful, but for now it was time to get back to work.
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Reasons why Truck Firms Utilize Factoring Firms.
As the manager of your own company, you may likely be much more than wary already of the hardship in making certain that cash flow matters do not become a dilemma down the line. After all, the most disappointing thing that can in all probability occur for your firm is to find yourself involved in a long and difficult predicament that leaves you forever looking for the resources you are in need of on an continuous manner.
For virtually any company in this predicament, the dilemma can come for waiting for work to clear up and actually be paid out into your bank account. Statements, checks, and the like could take some time to actually to be taken care of which can easily leave you with momentary cash flow troubles. Luckily, there are options out there for industries to consider-- and just one of these is factoring agencies.
Factoring agencies will, in trade for your invoices, give you with the finances right now to make sure that you don't have to worry about the delaying time span that could make paying out the bills and obtaining materialsmore challenging. With this form of setup, invoice factoring can become incredibly practical for lots of firms who need to get out of a money pitfall which they have found themselves in.
For the reason that, depending on the volume of the work, it can take up to 60 days for several enterprises to get paid out then it's crucial to blanket your own back and certainly not leave yourself money short to pay off the bills. After all, how many companies have two months revenue just lying there to cover all their bills till they make money?
This is specifically correct of trucking companies. They often tend to take care of tons of invoices which means a significant quantity of collection period concerns company owner themselves. Trying to get paid in time can become an amazing difficulty and this is why you use trucking factoring firms who are thrilled to help out truckers specifically.
As all of us understand, trucking is an exceptionally big industry with a lot of firms out there handling hundreds of drivers. Unfortunately, plenty of these drivers land up in finances difficulties simply because they are still waiting on work from six weeks in the past to actually pay them. When this is the situation for a truck organization, turning to factoring providers for aid may be the finest choice left.
This indicates that a trucking business can compensate the paychecks of the workers, keep all the vehicles refilled with fuel and continue to surmount, grow and expand without constantly waiting for the funds which is taking too prolonged to come in. Trucking Businesses working without a factoring program applied are leaving themselves at critical threat, as rivals cash out promptly and proceed to broaden.
There's genuinely very little to be troubled about when it comes to using a Factoring firm-- they aren't like a banking company or a person who is going to leave you with a large mass of financial debt to repay. You give them genuine invoices from work you have already completed , you are merely facilitating the repayment process.
In the Usa, where truck enterprises do well, factoring companies are not considered taking on loan in any capacity. This confidential deal then enables both parties to make money and delight in a comfortable future-- it gives the factoring provider a warranted asset of money to add to the list and it offers the trucking company the needed cash that they sweated to acquire.
The trucking business provides their invoices to the factoring company. The trucking factoring firm then collect the payment amounts from the trucking company's clients. Factoring has been all around for hundreds of years and has been utilized for decades by lots of different fields-- but none much more so than truckers. While you may miss out on a small part of the money, something like 1-3 % depending on who you deal with, it implies that you are getting the money today and can actually start putting the cash to operate.
Once and for all, an IOU or an invoice is not going to cover bills, is it? For trucking agencies when the funds can be very good one day and gone the next, it's up to the drivers to work smartly and to make certain they are leaving themselves with a considerable amount of time and money to get through the week up until they are paid once again.
So the next time your trucking establishment is enduring some short-term cash flow troubles and you are investing an excessive amount of time chasing slow paying clients, why not start off looking into making use of a factoring businesses as a means to get your cash and give yourself a more at ease future in the eyes of your trucking staff and your bank balance?
Traditional Bank Loans
Bank loans are an extremely traditional way for a business to get financing. These loans can be a life-saver, but they're not always available to every business. For example, a fairly newly established business simply may not have the assets to readily get a loan from a bank, even if they do, the standard collateral for a business loan is the business itself, which means that if you cannot make your loan payment, you risk losing your entire business. Plus, the amount you apply for through the bank is the actual amount that you are going to receive. Once the loan is paid off, you can then apply for another loan if the need arises.
What Are Trucking Factoring Companies?
Trucking Factoring companies don't offer loans, and you don't go into debt when you get money from a Trucking Factoring company. The finance you receive from the Trucking Factoring company is determined by money already earned by your business, but not yet received. The Trucking Factoring company purchases your accounts receivable, or part of them, for a certain percentage of their value - this is normally about 80-95%. The amount of finance you can receive will be based on the amount you have earned and the accounts receivable you are prepared to 'sell.' Once you have set up Trucking Factoring account it continues as long as you wish it too and the amount of money available to you even can grow as your business grows, giving you the ready cash you need to meet your own obligations.
What Are The Benefits Of A Trucking Factoring Company Versus A Traditional Bank Loan?
Not every business can benefit from Trucking Factoring account financing because you have to have a business with accounts receivable, however there are many benefits for those who can access this type of finance.
1. There is no debt. Since the Trucking Factoring company actually buys your accounts receivable you don't actually incur debt like you do with a bank loan. This has many benefits including the fact, that this type of financing won't affect either your business credit rating or your personal credit rating. Should the unforeseeable happen and your business fails, you won't have to worry about anyone coming after your personal as well as your business assets to pay off a loan. With a bank loan, the debt goes onto your credit report, and even one late payment can adversely affect your businesses credit, and even the ability to get insurance and may even reflect upon your personal credit rating.
2. No Collateral Required. Another benefit of using a Trucking Factoring company instead of a traditional loan is that you aren't required to provide collateral to the Trucking Factoring company in order to secure financing, because the company �buys� the accounts receivables; not loans you money based on them. In addition, while the Trucking Factoring company does run a credit check on your customers whose accounts receivables are offered for financing, the state of your credit is not an issue. This makes it easier for fledgling businesses to get the financing they need through a Trucking Factoring company (as long as their accounts receivables are in good order) then from a bank, who may not feel that you have been in business long enough to be worth the risk of issuing you a loan.
3. Receive Your Money Faster. With a Trucking Factoring company you can actually get the money you need faster. The money will normally be in your account within 24 hours, once the Trucking Factoring company is confident that your customers� accounts are likely to be paid. Borrowing from a bank begins with vast amounts of paperwork, the loan must be underwritten, and this can take ages before you're notified if the loan has been approved.
4.Interest is Paid Up Front. With a bank loan interest continues to build, and this has to be paid the whole time you have a business loan; however with a Trucking Factoring company there is no interest - they take it right off the top by deducting it from the total amount of receivable accounts. So you don't have to worry about monthly loan repayments, and you don't have to worry about the amount of interest payable, because all the money in the account is yours to spend.
As you can see, there are several benefits that makes considering financing through a Trucking Factoring company over a traditional bank worthwhile. However, there are also a couple of other benefits that a factory company can offer your business is far beyond the scope of the bank. The main benefit is that once you've sold your accounts receivable to the Trucking Factoring company, you are free from having to collect money owed by your customers. The Trucking Factoring company takes over that chore, since it is now their money to collect. Trucking Factoring companies are very good at collecting these debts, saving you the time and effort that you need to devote to your growing company.
Another bonus is that, because the Trucking Factoring company has evaluated the quality of your customers' credit before buying the accounts receivable, you learn valuable information regarding your customers, like which ones are likely to pay, and which ones are less likely to pay.While a Trucking Factoring company is not the only way for your business to obtain the money it needs to keep growing, it does offer a type of financing well worth considering.