Factoring as a Help for Trucking Companies

The trucking market continues to grow these days, which is why many companies are starting to pay more attention to accounts receivable. If your business is related to trucking, you definitely understand the growing needs of your customers and the need to meet those needs. 

At a time when other transportation companies are thriving, keeping up with the growing needs of customers is very difficult. And a drastic change in your operating system and equipment upgrades can really shake up your finances, dragging your business to the bottom. But here comes the light at the end of the tunnel: factoring.

More About Factoring

Many trucking companies know for a factoring of accounts receivable is the most effective way to accelerate a company’s growth and increase its cash flow. 

Instead of waiting a month or longer to receive payment, your company can create an invoice and receive a cash advance in less than 24 hours. Unlike a simple bank loan, factoring grows as your accounts receivable grows and does not involve debt.

So how does factoring work? In brief, it involves the following items:

1. Delivering the goods to the buyer.
2. Sending an invoice to the factoring company, which will send the invoice to your customer.
3. The factoring company makes a cash advance to your company of 80% or more of the invoice value.
4. Your client pays the factoring company the full value of the invoice. It also pays you the reserve balance with a deduction in the form of commission.

Advantages of Factoring

The advantage of factoring in the form of same-day processing of your invoices is not the only one. There are other obvious advantages:

1. Most factoring companies provide free support for your offices, which gives you more time to focus on growing your business.
2. Factoring is primarily based on your customers’ lines of credit, not your own creditworthiness.
3. Factoring is very flexible. It can be customized so that it can provide the capital the company needs.
4. Factoring is not a loan, and therefore there is no possibility of debt with it.
5. Factoring works so that the amount of financing is able to grow as your accounts receivable grows.