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December 28, 2018

Solving Cash Flow Problems in Trucking

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According to JP Morgan, fuel forecasts are looking promising in 2019, which is good news for any fleet-based industry routinely moving its vehicles across the U.S. However, the freight trucking industry is fickle and nearly every independently-owned company runs into cash flow problems sooner or later — even in times of economic upturn.

Because freight companies are susceptible to cash strains, thanks to vehicle repair needs as well as the high cost of employing and giving benefits to drivers, owners need to take extra precautions. Cash flow issues — especially when they are unexpected — can jeopardize your bottom line and even the continued existence of your business. If your company does not have access to immediate funding when you need it, it can often be permanently derailed.

If you’ve ever worried about a lack of cash flow threatening your business, invoice factoring can really help your trucking company because no matter the size or scope of your business operations, factoring can support your business in a number of key ways. 

Freight factoring benefits extend beyond same day funding, as the top factors in the business also offer fuel advances as well as risk mitigation through free credit checks, as well as back office AR support through collections. 

A trusted partner like Accutrac Capital provides funding solutions to:

    • businesses in transition or companies that have tripped their bank covenants
    • companies going through a tough year 
    • companies going through a change of ownership
    • companies who cannot acquire the funds they need from traditional banking or lending institutions

How Exactly Does Freight Factoring Work?

Freight factoring is a cash advance funding arrangement that you enter with a third-party factoring company. This will allow you’re trucking business to sell outstanding invoices in exchange for upfront cash equaling nearly the value of the invoice. The top American freight factoring companies will advance businesses up to 97% of the invoice value upfront minus a nominal factoring fee. The remaining 3% will be held in reserve and remitted when the invoice is eventually collected from your customer. 

When you factor your freight bills, not only do you no longer have to wait upwards of 90 days to receive payment for delivery, but your factoring company will collect on the outstanding invoice on your behalf. This AR support frees you up from the need to make collection calls or track customer payments, allowing you to focus on growing your business. 

Factoring Freight Boosts Trucking Businesses of all Sizes

Freight factoring companies understand the difficulties of running a trucking business in today’s economic climate. This is why it pays to choose a factoring company that works exclusively in the trucking industry — such as Accutrac Capital. Companies like this understand your business inside and out and can offer you favourable terms and value-added benefits that you actually need. 

Another net positive is the fact that you can qualify for funding even if you are a start-up or lack the collateral required by most banks. Factors make the qualification decisions in part based on your customers’ credit ratings, so if you have reliable customers and you make frequent deliveries, qualification should be a breeze. 

If you need to find a sure source of funding to cover unexpected cash flow hiccups or to cover the costs of expansion, and you think that freight factoring might work for your company, look for a trusted factoring partner to help get your wheels back on the road.


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