For trucking company owners, consistent cash flow is essential. When revenue flows smoothly, operations run efficiently. However, delays in payments can disrupt this process, potentially halting progress. A primary cause of these issues for small to mid-sized trucking businesses is slow-paying clients, often taking up to 60 days to settle invoices.
While larger companies might absorb these delays, smaller operations with fewer vehicles often struggle. Turning away slow-paying clients isn’t a viable solution. Instead, consider freight bill factoring.
Freight factoring provides immediate cash for your freight bills, typically within 24 hours. This arrangement allows you to maintain operational momentum while the factoring company manages the payment collection. With factoring, you secure immediate funds to cover driver payments, vehicle maintenance, and fuel costs.
Qualifying for freight factoring is straightforward, especially since the primary criterion is having reliable, albeit slow-paying, clients. This allows you to confidently work with clients who remit payments in 30 to 90 days, eliminating payment-related stress.
The process is simple:
1. Deliver the load and provide the necessary documentation to the factoring company.
2. Receive approximately 90% of the freight bill amount as an advance within 24 hours. The remaining 10% is reserved for potential billing adjustments, with immediate access to funds.
3. Once the client settles the invoice, the remaining 10%, minus a small factoring fee, is returned to you.
In conclusion, freight factoring removes payment delays and supplies the necessary capital to operate your trucking company effectively.