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Our Factoring Small Business
Your Freight Company
The Cash Your Company Needs
Medium-Size freight brokerage companies, specifically those who have actually not been in existence for extremely long, will frequently find it tough to protect a loan. Banks are commonly hesitant to lend cash to businesses that don't have a great deal of income and properties. They also want evidence of the practicality of a business and hence require that many operations, especially small ones, be in company for a particular quantity of time before they are willing to turn over any cash. Because of this, a small business typically has a couple of cash generating options when needs arise. One choice available, but commonly neglected, is receivable Financing. This is an exceptional method for a small company to obtain cash.
161 New Ways to Finance Your Company - in This fascinating - Select
A Receivable Loan C0mpany Instead Of A Traditional Bank Financing
Exactly how to Enhance Cash Flow Without Borrowing -Cash Money flow is one of the primary reasons businesses fail.
At one time or another, every company, even successful ones, have experienced poor money flow.
Cash flow does not have to be a problem any ever more. Do not be deceived -- banks are not the only places you can get funding. Other options are available and you do not have to borrow. What is truck factoring ? One option is called factoring small business. Truck Factoring is the process of offering invoices to a financier rather than waiting to collect the money from the
client. Oh, the Irony- Trucking factoring has a paradoxical distinction:
It is the financial
foundation of many of America's most successful businesses. Why is this paradoxical ? Since staffing factoring is not instructed in business colleges, is rarely discussed in company strategies and is relatively unknown to bulk of most of American business individuals.
Yet it is a monetary process that frees billions of dollars every year, enabling thousands of companies to grow and prosper. Invoice Factoring has been around for thousands of years. Trucking Factoring Businesses are investors who pay cash for the right to get the future payments on your invoices. An overdue receivable or invoice has value. It is a financial obligation your client has actually to pay in the near future. Factoring Principals--Although factoring
deals exclusively with business-to-business deals, a big portion of the retail business uses a factoring principal. MasterCard, Visa, and American Express all utilize a form of factoring in their retail transactions. Utilizing the purest definition of the word, these big customer finance business are really simply large Invoice Factoring Businesses of consumer paper. Think about it: You purchase at Sears and charge
it to your MasterCard. The shop gets paid almost immediately, even though you do not make payment until you are prepared.
For this service, the charge card business charges Sears a charge (typical common normal charges range from 2 to 4 percent of the sale). The Benefits Commercial Factoring can offer numerous advantages to cash-hungry business. Instead of waiting 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 small discount
off the amount of
the invoice. Payroll, advertising efforts, and working capital are simply a few of the company requirements that can be met with instant money.
Factoring Small Business offers the means for a manufacturer to renew inventory and make more products to sell: There is no longer a requirement to wait for earlier sales to be paid. FACTORING is not simply a cash management device for manufacturers: Almost any kind company can benefit from Trucking Factoring. Typically, a company that extends credit
will have 10 to 20 percent
of its yearly sales tied up in invoices at any given time. Think for a minute 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 client s invoice, however you can offer that invoice for the cash to meet those obligations. Using truck factoring companies is a quick and easy process. The factoring company purchases the invoice at a price cut, usually a couple of percentage
points less than the face value of the invoice.
Please call our trucking factoring experts at 1 - 888-239-9162
or E-mail Us
The American Transportation Organization
specifies that there are about
195,000 work with transportation
250,000 personal providers trucking
firms licensed to
operate in the U.S. that transferred,
according to their newest data of millions
items, supplies and
standard products .
There are several typical
groups on our nation
roads transporting these
crucial products to our
shops, factories and harbors.
Furthermorefreight bill factoring
many of them and offer their
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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Since the mid 1980s Alvarez Truck & Haul have been successfully running their freight business. For more than twenty years they've been delivering goods for most major industries in the nation, with business booming as they traversed the country, in all kinds of weather, for all kinds of clients. During the heady times from 2002 to 2007, Alvarez was a top rated accounts receivable mastermind of the trucking industry. Few customers were ever late on bills and those clients who were, were sure to turn in their late payments within a reasonable amount of time. The money was flowing, and times were great.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 to a crawl
. And worse yet, Alvarez had noticed during the early part of 2008 that though the bulk of their clients were always on time with payments, the few late-bloomers there were, had seemingly started to spread this illness. Spring changed to summer, summer changed to fall, and the CEO of Alvarez, Gabriel Hansen, was beginning to feel very uncomfortable indeed whenever he looked at their weekly Accounts Receivable reports. The numbers of clients who owed him back debt were growing.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? When checking his bookkeeper's records this was definitely not the case. Perhaps he was losing his customers to his competitor, who seemed to offer very low prices with no guarantee of quality or performance, and these clients who were in debt to his company had possibly disappeared leaving him stranded. Perhaps they were unable to pay their debt to him, but were able to meet the costs of a lesser service. So he did the necessary research and, after discussions with friends in the same field, he realised that no, his customers hadn't gone anywhere else. The had just gone!.The situation looked dire to Gabriel Hansen. 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, Charlene, and neither were unable to stop the constant worry over the lack of funds.""Lin, I have a really bad feeling,"" he'd sadly say to his wife.""Well, what do you think it is?"" she would say.Gabriel would stare off into the distance, and then slowly close his 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 then a haze would cover his trucks and his vast fleet would vanish to leave just a few. Why couldn�t he work out how to resolve this financial problem with his business?""I think I know what it could be,"" Gabriel said. ""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."" Linda could only grab her husband's hand and look at him lovingly, ""It's a hard economy. It might be awhile until things get settled up.
""Gabriel knew very well that Charlene was only trying to help, but his responsibilities weighed heavily on his shoulders and he knew he had better do something soon to resolve this situation.The following day Gabriel walked into his office with a spring in his step, determined to call each and every client who owed money to Alvarez Truck & Haul. Now, it wasn't the most efficient way to spend a day as a chief executive, what he really needed to be doing was to be overseeing all of the other intricacies of shipment and delivery and reaching out to prospective clients or retraining his sales team to do the same. 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 Gabriel was realising just how much trouble he was in.After a half day of contacting debtors in vain - they dodged his calls or promised to call back at worst or made minimal interest-only payments at best - he was about to throw in the towel when his secretary Tonyaerley knocked at his door.
""Can I have a word with you Gabriel?"" she asked standing in the doorway.
""Sure thing Tonya, come on in."" Gabriel relaxed back into his chair and looked up at Tonyaerley.""Well, I did a little searching this afternoon and tried to figure out a way out of this mess Gabriel."" 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?"" Tonyaerley asked.""It sounds vaguely familiar. What is factoring""? he asked.""Well,"" she began, ""It�s actually quite simple really.
So basically, factoring invoices would enable us to get paid on the nose for loads that we haul.""Gabriel interrupted ""Immediately?"".""Immediately, yes"" she added, ""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.. Additionally, the factoring will help to determine the creditworthiness of our customers independent of their credit history with our business. It�s a broad view.��I see,� Gabriel said. �And then what?��Following the completion of their review and once we've been approved for a contract with the factoring company, then we sit down to negotiate conditions and terms. There�s a lot of flexibility depending on the business volume and credit histories. This company tells us what the cost will be to purchase factoring for our accounts receivable. We come to an agreement and the funding starts pouring out.�Gabriel was still a little concerned. He leaned forward in his chair and studied the paperwork very closely.""It sounds too good to be true, Tonya,"" he said.""Now, now, I know, I thought the same thing. But really, they have guaranteed us experts that do all the legwork, which would free us up here to focus on our clients in good standing and marketing, all that good stuff. They appear to be very flexible, Gabriel,"" she drew a circle around a paragraph on the document 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. Apparently they can figure this all out in two to four days.
""""It does all sound pretty good, remembering that we're all tapped out now with loans from the bank last year to repair vehicles, and we all know just how tight money is. 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,"" said Gabriel.Gabriel took in a long slow breath, then looked at his secretary with something like hope in his eyes.""Precisely�. I think this might just be a way out of the trouble we're in with these folks who owe us money.""Gabriel took a moment to think about this solution, and agreed with his secretary. The customers who were in debt to Alvarez Truck & Haul were professional resources of the company, but they were also long-standing friends. Gabriel wasn't prepared to lose these relationships just because they were having financial issues at the moment. Gabriel knew only too well that the whole economy was floundering, and that it was not going to change overnight. If he didn't handle these debtors in the right way, that unknown amount of time could spell disaster for all of them. He didn't want to lose business but he also didn't want to lose any more money.""Let me go over this tonight Tonya, and thankyou."" Tonya nodded, stood up and left the office feeling that she had helped her employer keep on his shirt and hers too.Gabriel stayed at his desk for a long time, looking over the details they hadn't discussed during their meeting. He wondered if there might be other problems freight factoring could help Alvarez Truck & Haul 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. Gabriel was surprised: it said that his company could get up to fifty percent cash advances on load pickups. 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 Alex the good news,"" Gabriel muttered to himself.Alex is Gabriel's son-in-law, and he really admired the ideas behind Alvarez, so much so that only two years before he had started his own transportation service business. Gabriel knew then what struggles Alex would face but he encouraged him nonetheless. With the economy the way it was, if an established company such as Alvarez was struggling then the little guys, like Alex, were going to be in even more trouble. Perhaps the antidote to these problems was in freight factoring, and they were about 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 Gabriel was beginning to find his way out of the hole his debtors had created for him.They adopted reasonable factoring purchase contracts and stopped wasting their own precious time trying to collect debts. They took that time and refocused effort to offering competitive prices in new territories. Gabriel looked back on the dismal months of life before freight factoring and almost shuddered at the thought. Had he missed the boat on this one, he probably wouldn't be in business today.
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Factoring in the Future of a Trucking Business: A Story Edwin Boyd let the phone ring on his desk. His morning coffee cooled and his cigarette smoked away in the tray: Edwin is thinking, and pondering the biggest decision he's ever had to make for his trucking business. Boyd Trucking Company had reached a turning point and he now had to make a decision as to whether he should sign up with a factoring company, and indeed if this would be a good or regrettable decision for his business.
More than forty years ago Edwin's father had started this business working as an owner-operator and eventually growing Boyd Trucking Company into a fifteen trailer fleet. There had been some hard times when it seemed everything was going to go under and even Edwin�s mother strapped herself into a cab to make hauls. His father had lived long enough to witness the price of hires drop during the recession and watch the eruption of fuel prices afterwards. But now things were different: the company was in Edwin's hands and he needed to ensure that this business would be left in great shape for his sons.
To move Boyd Trucking Company ahead into the future, he needed a steady cash flow but there was just not enough money to go around. His employees needed to be paid. They had families and household bills too. Some of the refrigerated trailers were in need of repairs and he felt to stay competitive it was also a good idea to invest in specialized haulers to be ready for the constant requests he was getting for loads of new energy and agriculture equipment. Every time he had to turn down a request, Boyd Trucking looked weak in a very strong market.
His father would have told him to wait and to take his time adding on new technology. Edwin chuckled, thinking about his father. He remembered when his father was totally against installing 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.
Edwin believed a successful man is always thinking of his next step. What would be the next step for Boyd Trucking? 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? There was a lot he didn�t understand about the process. It sounded a lot like ninth grade algebra which just didn�t feel like it belonged as part of the trucking business. A factoring company actually purchases your invoices and takes control of your accounts receivable, payment being a certain percentage of the amount invoiced. The factoring company gives the trucking business its payment right away which allows the business to have continuous cash flow so it can pay employees, buy fuel, and make repairs for upcoming hauls. 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.
Edwin had to really consider what his next step was going to be. He had heard of companies charging for same day money transfers, advancing a percentage of the money owed to your business, while the rest is held in a private account if the bill wasn't paid within sixty or more 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! He'd even heard about some companies putting you onto a sliding percentage scale regardless of any previously signed contracts for possibly 3% or 7%, and there you are now with 10% coming as a charge to you out of the freight bill. His colleague, Ronnie, who owned a trucking company in Missouri, was nearly destroyed by a factoring company who charged him the full freight bill on top of the fees for factoring. Well, what was the point of going to a factoring company if there was shady business like that going on?
However, it all turned out to be very simple. When he called the factoring companies he discovered they were very open about their business practices, and very friendly and helpful. Their customer service actually knew things about their company and spoke in nice clear English so he could understand what was being explained. 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 sounded like a great scheme to him.
It was really refreshing dealing with the factoring people. 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 Edwin 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 think poorly of Boyd Trucking and the factoring companies appeared capable of handling the accounts receivable in the same polite manner that his father had used over the years.
Edwin 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 Boyd 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?� Herbert Gardner asked as he leaned back in his chair, crossing his legs. The woman who sat across the desk smiled and shook her head.�Not quite,� she stated.Herbert Gardner 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 Jared. His company was called Smith Trucking, named after both of his grandfathers, Everett and Rafael. They had both been hardworking men, and had done a lot to make Herbert the same.Six months ago disaster struck Jared's business when two out of his fleet of fifteen trucks were taken off the road.
One was involved in a very costly accident, and the other simply rolled over, and headed to the trucking graveyard. Herbert depended on his full fleet, and missing two trucks was devastating . In addition, he just didn't have the available cash to buy a new truck, plus repair the other one.A big problem a lot of trucking companies came across was how bills were paid in the industry. 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.Herbert was an excellent business man, and he certainly hadn't done anything wrong. Things had happened that he couldn't have predicted, and he had to figure out a way to keep his business from hurting, or even going under.And that's why he found himself across the desk from this woman. Her name was Delores and she worked for a factoring company. Herbert 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.Delores explained. �It�s not a loan, we purchase your accounts receivable. We aren�t giving you money to be paid back later, we�re buying something from you, and you can buy it back when you can. This is a win-win situation: we're protected from a total loss, and you're protected from the ridiculous fees and charges you'd have to pay if you borrowed from a bank.Herbert agreed. It sounded perfect - perhaps too good?.Delores 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 thought I was going to lose my company.�Delores nodded. �Yes, we get a lot of that. Listen, I�d hate to see you lose your company. You work hard, you�ve put everything you can into it. Sometimes you need help. That�s what we�re here for.��Well, I'm very grateful that you came to see me today.��It�s right down the road, usually we do it all online, but I didn�t mind swinging on by today,� said Delores with a smile. �Let's work out a solution to your problem.�And with that they set about making a profile.
Herbert completed the form, with Delores offering advice as needed.
The completed profile gave Delores and her company all the information they needed on Jared's business, and with this information they would determine if this business would in fact be suitable for Factoring. In truth, not all companies were. Some businesses are beyond the help of a Factoring company, while other businesses weren't in enough financial stress to warrant it. As Herbert completed his form, Delores listened to his story and she felt quite sure he would be the ideal candidate for Factoring.When the form was done Delores took it and slid it into her briefcase. Standing up, she reached over the desk and shook Jared's hand. He stood before they shook as well, and then smiled. They said their goodbyes and Herbert 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 Delores 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 there, he was on the right path, and he was working to make things right.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 successful. Offering home cooking in his own hometown, his business had really prospered.But it wasn't what he really wanted to do. He wasn't passionate about the food industry. He thought about it for a long time, then decided it was time to sell his restaurant. He took six months off, and during that time he decided to create Smith Trucking. So he did it. For the second time in his short life he created a company from the ground up. He had been successful.And then the trucks went down, and his success looked to be in flux. He was nearing fifty. He was concerned that he just didn't have the energy left to try and save the business. But he couldn�t give up. The idea of cutting his losses, shutting down, laying off his workers, it actually made him sick some nights. He didn�t know how to say quit.And now it seemed as though he wouldn't have to - all because of Factoring. Herbert opened his eyes, sat forward, turned his computer on. He had lots to do. He could be thankful later, for now, it was time to work.
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The key reasons why Trucking Corporations Work with Factoring Firms.
As the manager of your own business enterprise, you may likely be much more than knowledgeable already of the hardship in making certain that cash flow concerns do not become a dilemma down the line. Anyway, the most terrible thing that can potentially take place for your enterprise is to find yourself involved in a long and complicated predicament that leaves you forever searching for the cash you require on an continuous basis.
For pretty much any business in this case, the trouble can come for waiting for work to clear up and actually be paid into your balance. Bill of sales, checks, and the like could take a long time to actually to beprocessed which can easily leave you with temporary capital issues. Thankfully, there are options out there for firms to look into-- and one of these is factoring companies.
Factoring agencies will, in substitution for your statements, supply you with the cash right away so you don't have to worry about the lingering phase that could make paying out the expenses and purchasing toolsmore difficult. With this kind of system, invoice factoring can end up being tremendously practical for plenty of establishments who have to avoid a money ploy which they have discovered themselves in.
Since, depending on the scale of the task, it can take up to 60 days for many enterprises to get paid out then it's critical to take care of your own back and certainly not leave yourself resources short to pay off the monthly bills. After all, how many business enterprises have two months income just lying there to deal with all their overheads till they get paid?
This is specifically correct of truck agencies. They have the tendency to handle tons of statements which means a significant volume of collection period involves business owner themselves. Seeking to get compensated in time can end up being an extraordinary headache and this is exactly why you employ trucking factoring firms who are glad to help out truckers exclusively.
As most of us determine, trucking is an incredibly massive market with countless companies out there utilizing hundreds of drivers. Unfortunately, many of these drivers end up in money troubles because they are still expecting work from six weeks previously to actually pay them. When this is the circumstance for a truck business, depending on factoring agencies for solutions maybe the finest option left.
This signifies that a trucking corporation can pay the salaries of the crew, keep all the cars topped off with fuel and continue to go up, rise and expand without constantly waiting for the resources which is taking too lengthy to come in. Trucking Enterprises running without a factoring program implemented are leaving themselves at considerable danger, as competitions cash out fast and carry on to expand.
There's absolutely almost nothing to be stressed about when it comes to employing a Factoring establishment-- they usually are not like a bank or someone who is going to leave you with a large pile of personal debt to repay. You give them legitimate invoices from work you have already completed , you are simply speeding up the repayment system.
In the United states of America, where truck establishments thrive, factoring firms are not considered taking on loan in any capacity. This confidential contract then allows both parties to make money and indulge in a comfortable future-- it gives the factoring provider a guaranteed asset of earnings to include in the list and it furnishes the trucking business the required funds that they worked hard to gain.
The trucking firm bestows their invoices to the factoring business. The trucking factoring agency then obtain the installment payments from the trucking company's customers. Factoring has beenaround for hundreds of years and has been utilized for several years by lots of varying business-- but none much more so than truckers. While you may well lose out on a small part of the money, something like 1-3 % depending upon who you collaborate with, it signifies that you are receiving the funds today and can actually start setting the cash to operate.
Once and for all, an IOU or an invoice is certainly not going to pay for spendings, is it? For trucking agencies when the money can be excellent one day and gone the next, it's up to the drivers to work smartly and to ensure they are leaving themselves with a considerable amount of time and money to get through the week till they are paid for once more.
So the next occasion your trucking enterprise is bearing some momentary capital issues and you are investing a bit too much time chasing sluggish paying customers, why not begin considering using a factoring businesses as a means to get your cash and give yourself a more comfortable future in the eyes of your trucking crew and your bank difference?
Bank loans are an extremely traditional way for a business to get financing. While these loans are handy they are not available to every business. As an example, a newly formed business may not have the required assets to qualify for a bank loan, and even if they did, it's usual practise for a bank to use the business itself as collateral. This means that if you default on your loan payment you could lose your entire business. In addition, while you apply for a certain loan amount, that is all the financing you are entitled to. 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. Rather the financing you receive from a Trucking Factoring company is based on money your business has already earned, but have not yet received. Trucking Factoring companies actually purchase your accounts receivable or at least part of them for a percentage of their total worth, Normally around 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 a Trucking Factoring account has been created for you, it will continue for as long as you need it, with the money available continuing to grow as your business grows, and providing cash as you require it.
What Are The Benefits Of A Trucking Factoring Company Versus A Traditional Bank Loan?
While not every business can take advantage of Trucking Factoring account financing (you have to have a business that has account receivables) for those that can use this type of financing there are several distinct benefits.
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. In the event that your business fails, you wouldn't have to be concerned about someone coming after your personal or your business assets in order to pay off a loan. The debt goes onto your credit report with a bank loan, with only one missed payment adversely affecting your business credit: it would also affect your ability to secure insurance, and may reflect on your personal credit rating as well.
2. There's 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. Plus, the state of your credit rating is not an issue; however the Trucking Factoring company will run a credit check on your clients whose accounts receivable are being offered for financing. This means that it's easier for new businesses to access the finance they need through a Trucking Factoring company, providing their accounts receivable are in good order. A bank may believe you haven't been in business long enough to be able to cover this risk.
3. Receive Your Money Faster. Using a Trucking Factoring company means that you'll get the finance quicker. 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. With a bank, there are vast amounts of paperwork, then the loan has to be underwritten, which can take months before you actually see the loan if it is approved.
4.You receive interest 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 from the above, there are some great benefits to financing through a Trucking Factoring company, and not through a traditional bank loan. In addition, there are other benefits that a Trucking Factoring company can offer you, outside the scope of a bank. The most important benefits is that once you sell your accounts receivable to the factory company, you don't have to take time away from running your business to collect the money owed from reluctant to pay customers. The Trucking Factoring company takes over that chore, since it is now their money to collect. Trucking Factoring companies are very efficient at debt collecting, and this frees up your valuable time to devote to running your 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.