They Grinned When the Banker Spoke to Me in French -
Our Freight Bill Factoring Companies
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The Money Your Company Needs
Small freight businesses, particularly those who have actually not been around for really long, will typically find it difficult to secure a loan. Banks are typically hesitant to provide money to businesses that do not have a lot of income and assets. They also desire evidence of the viability of a company and thus require that most operations, specifically small ones, be in company for a particular quantity of time before they want to turn over any money. Since of this, a medium-size business typically has a couple of cash creating choices when needs occur. One option available, however often overlooked, is receivable Financing. This is an exceptional means for a medium-size company to get cash.
My Company has 9 New Products - Imagine - Pick
An Accounts Receivable Factoring Company Instead Of A Traditional Bank Funding
How to Enhance Money Flow Without Loaning -Cash Money flow is among the main reasons companies fail.
At one time or another, every business, even successful ones, have experienced poor money flow.
Cash flow does not have to be an issue any more. Do not be deceived -- banks are not the only locations you can get funding. Other solutions are available and you do not have to borrow. What is trucking factoring ? One option is called freight bill factoring companies. Truck Factoring is the procedure of selling invoices to an investor rather than waiting to gather the cash from the
customer. Oh, the Irony- Truck factoring has an ironic difference:
It is the financial
foundation of many of America's most effective companies. Why is this ironic ? Since receivable funding is not taught in business colleges, is seldom discussed in business strategies and is fairly unknown to bulk of most of American business people.
Yet it is a monetary process that frees billions of dollars every year, enabling thousands of companies to grow and succeed. Factoring has actually been around for countless years. Accounts Receivable Factoring Companies are investors who pay money for the right to get the future payments on your invoices. An unpaid receivable or invoice has value. It is a financial obligation your customer has to pay in the near future. Factoring Principals--Although factoring
offers exclusively with business-to-business deals, a large percentage of the retail business uses a factoring principal. MasterCard, Visa, and American Express all use a type of factoring in their retail deals. Using the purest meaning of the word, these big consumer finance companies are truly simply large Receivable Loan Financing Companies of consumer paper. Think about it: You make a purchase at Sears and charge
it to your MasterCard. The shop makes money practically instantly, although you do not pay until you are ready.
For this service, the credit card business charges Sears a fee (typical common normal charges vary from 2 to four percent of the sale). The Advantages Invoice Factoring can provide many advantages to cash-hungry companies. Rather than wait 30, 60, 90 days or longer for payment on an item that has actually already been provided, a company can factor
(sell) its receivables for money at a small discount
off the dollar value of
the invoice. Payroll, advertising efforts, and working capital are just a few of the company requirements that can be met with instant cash.
Freight Bill Factoring Companies provides the means for a producer to replenish inventory and make more products to sell: There is no longer a need to wait for earlier sales to be paid. FACTORING is not just a cash management device for manufacturers: Practically any kind company can take advantage of Commercial Factoring. Generally, a company that extends credit
will have 10 to 20 percent
of its annual sales bound in accounts receivable 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 customer s invoice, but you can offer that invoice for the cash to meet those obligations. Using truck factoring companies is a quick and simple process. The factoring company purchases the invoice at a price cut, usually a couple of portion
points less than the stated value of the invoice.
Please call our freight factoring experts at 1 - 888-239-9162
or E-mail Us
The U.s. Trucking Organization
mentions that there around
205,000 employees with freight trucking
276,000 private service providers trucking
companies certified to
operate in the States that carried,
according to their latest listings of millions of
items, materials and
standard products .
There are numerous common
groups on our country
roads transporting these
crucial items to our
shops, manufacturingplants and harbors.
Andfreight bill factoring
countless of them and offer their
accounts receivablesfinancing 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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The largest trucking companies in the U.S. set a revenue record in 2013, but revenuegrowth slowed for the second year in a row.
The combined revenue of the 50 largest motor carriers rose to $106.6 billion last year, according to The JOC Top 50 Trucking Companies list, based on data prepared by SJ Consulting Group in Pittsburgh.
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If you're like most drivers, you're looking for a better company in trucking that might be offering the best jobs in terms of pay, freight, and hometime ' not to mention benefits or a sign on bonus. We've got all of our clients listed based on the states where they're hiring, so you can quickly find the best job in your home state. You'll see the very best nationwide trucking companies that have positions available.
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Wheeler Truck & Haul have been operating their business since the mid 1980s. 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, Wheeler was a top rated accounts receivable mastermind of 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 to a crawl
. Worse still, it was noticed by Wheeler 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, Leslie Murray, CEO of Wheeler felt a chill go down his spine whenever he would look at the weekly A/R reports. The numbers of clients who owed him back debt were growing.He had already been to the administrators to ask what the actual problem was. 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. 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. They couldn't afford to pay him their debt, but they could afford a lesser service, maybe. 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!.To Leslie Murray the situation looked desperate. 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. In the evenings he would discuss his concerns with his wife, Lucy, and still find no relief from the worry and frustration.
""Lin, I have a really bad feeling,"" he'd sadly say to his wife.""Well, what do you think it is?"" she would ask.Leslie 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 then a haze would cover his trucks and his vast fleet would vanish to leave just a few. What could cause this ultimate death spiral of business?""I know what it is,"" Leslie said. ""I've relied too long on the profits I receive from invoices alone. 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.
""Leslie 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 Leslie walked into his office with a spring in his step, determined to call each and every client who owed money to Wheeler Truck & Haul. This wasn't really a very efficient way for a Chief Executive to spend his day, and Leslie 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. Wasting money, wasting time - even with the best of intentions, Leslie knew that he was in trouble.
Poor Leslie 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.
""Leslie, can I have a word?"" she queried, standing in the doorway.
""Of course Thelma, please come in."" Leslie leaned back in his chair and looked expectantly at Thelmaerely.""Well, I did a little searching this afternoon and tried to figure out a way out of this mess Leslie."" 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 the word factoring?"" Thelmaerley asked.""It does sound vaguely familiar. What is factoring""? he asked.She began, ""Well, it's really very simple. So basically, factoring invoices would enable us to get paid on the nose for loads that we haul.""""Immediately?"" Leslie interrupted.""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. That profile will also include investigating our accounts receivable aging reports, our existing customer credit limits and so on. In addition, factoring will assist in determining our customers' creditworthiness, independent from their credit relationship with our company. It�s a broad view.��Leslie replied cautiously ""I see - and what happens then?��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.�Leaning forward, Leslie studied the documents very closely.""I don't know, Thelma - it just sounds too good to be true"", Leslie said quietly.""Yes, I know; that's exactly what I thought at the beginning. But think about it, Leslie: 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, Leslie,"" she underlined a paragraph on the paper before him.""How flexible?"" he asked.""It seems that they personalize their factoring charges so that the amount they're prepared to work with is commensurate with our client's debt and our needs. It only takes 2 to 4 days for this to be figured out. """"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,"" Leslie said.Leslie took in a long slow breath, then looked at his secretary with something like hope in his eyes.""Exactly�. This could very well be the answer to resolving the problems we're having with these clients who still owe us money.""Leslie thought about this and agreed with Thelmaerley. The clients who owed them money were long standing friends and professional resources of Wheeler. Just because they were experiencing difficulties paying their own bills now, Leslie was very concerned about losing these relationships. Leslie 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.""Well, let me think about this tonight Thelma, thank you."" Thelma nodded, stood up and left the office feeling that she had helped her employer keep on his shirt and hers too.Leslie 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 Wheeler Truck & Haul with? Running his pencil down the sheet, he noted that the freight factoring company could assist with fuel costs, fuel advances, and fuel discount cards. Leslie was surprised: it said that his company could get up to fifty percent cash advances on load pickups. Leslie was a typical business man: he despised binding contracts that didn't allow room to breathe, so he was pleasantly surprised to see that the factoring company didn't require a long term contract, that there was no minimum volume required, and that there were no sign-up fees.""I must tell Nathan the good news,"" muttered Leslie to himself.Nathan is Leslie's son-in-law, and he really admired the ideas behind Wheeler, so much so that only two years before he had started his own transportation service business. At that time Leslie knew the struggles Nathan would face, but he still encouraged him to follow his dream. With the faltering economy, if a big fish like Wheeler was hurting, a little guy like Nathan was about to catch his death. But, an antidote may have been found in freight factoring and Leslie was soon to find out.Some months later, having successfully gone through the entire process of the application, having experts study his credit history and statements and review his accounts receivable, Leslie found that he was starting his journey out of the despair which had been created for him by his delinquent account holders.They adopted reasonable factoring purchase contracts and stopped wasting their own precious time trying to collect debts. They used that time to refocus their efforts in being competitive in new territories. Leslie recalled those dismal months when he wasn't aware of freight factoring, and he shuddered at those memories. Had he missed the boat on this one, he probably wouldn't be in business today.
More Trucking Factoring Companies Story Articles
Factoring in the Future of a Trucking Business: A Story The phone was ringing on his desk, and Christian Dean just sat there letting it ring. His morning coffee cooled and his cigarette smoked away in the tray: Christian is thinking, and pondering the biggest decision he's ever had to make for his trucking business. Dean Trucking Company was at a turning point of growth and Christian had to decide if signing with a factoring company was the right way forward.
Christian�s father had started as an owner-operator and had grown Dean Trucking Company into a fifteen trailer fleet over forty years. Yes, they had survived some very difficult times when it appeared like they might go under, and even Christian's mother had jumped into the cab at times 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. Now the company was solely in Christian�s hands and he wanted to live to see it in better shape for his sons.
There just never seemed to be enough money to go around, and certainly no spare cash, but to move his company successfully into the future he needed a steady and reliable cash flow. He had employees to pay. They all have families and the usual household bills. 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. He knew that turning down these requests made Dean Trucking look inefficient and weak in what was currently a strong market.
He knew what his father would have said - 'wait, take your time before adding new technology'. Christian 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?� Also his father had the habit of teasing all the drivers he caught switching into automatic even though driving in automatic was much more efficient though not manly in his father�s eyes. 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.
Christian believed a successful man is always thinking of his next step. What would be the next step for Dean Trucking? And how would he be able to 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 like a ninth grade math problem and he wondered how this would fit into 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. During those thirty days the trucking company can't pay its employees and bills with invoices.
Now it was time for Christian to do his homework. 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. Worse still, if the customer defaulted on payment, the factoring company takes it out of the money supposedly 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. He knew he would have to be very careful if he was to avoid any of these shady companies?
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 was quite happy to sign an exclusive contract. He liked the idea of a long term commitment so he knew he wouldn�t have to bother going back and forth to different companies and wasting time filing more forms. 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. He was more than happy with the figures he was offered in percentage terms on the freight bills. It sounded like a great scheme to him.
For Christian it was quite a relief to be dealing with the factoring company. They were extremely helpful and more personable than the bank staff. It seemed as though those bank people spoke another language, but these factoring guys knew the trucking business and spoke to him like a client, not like a beggar 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 Christian 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 Dean 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.
Christian 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. With the capabilities of this new cash flow, Christian could actually expand Dean Trucking Company further across the country and perhaps even go international into Canada. He was a happy man again knowing that he had just made a decision which would guarantee the success of his business and his sons wouldn't be inheriting a financial mess.
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Trucking Factoring Articles
�So It is not a loan?� asked Jerome Turner, reclining back into his chair and crossing his legs. The woman sitting across the desk from Jerome smiled at him, shaking her head.�No, not exactly,� she said.Jerome Turner 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 Shane. His company was called Alvarez Trucking, named after both of his grandfathers, Ernest and Julian. Both of these men had been very hardworking and had set a great example for Shane.Six months ago disaster struck Shane'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. The financial security of Shane's company relied on his full fleet on fifteen being on the road, and missing two trucks was just devastating . Furthermore, buying a whole new truck and fixing the other simply took more cash than Jerome had on hand.Paying of bills in the trucking industry is always a major cause for concern for businesses.
You could go a month or more before bills were completely paid off. This system works okay as long as no problems arise, but if they do, then things can get quite sticky.Jerome 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. Jerome knew she was employed by a Factoring company and that her name was Anna. Jerome 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.Anna explained. �It�s not a loan, we purchase 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. 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.Jerome agreed. It sounded good to him, almost too good.Anna laughed. �You look like you don�t believe me,� she said.�Oh no, I do: it just sounds too good to be true. I thought I was going to lose my company.�Anna nodded. �We get that a lot. 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. Sometimes you need help. That's why we do what we do.��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 Anna with a smile. �Let�s see what we can do to help you.�And right there and then they created a business profile. Jerome filled the form out, with Anna available to help him if he needed it. The profile filled Anna and her company in on Shane�s company, and would help them determine if he was 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. Listening as Jerome filled out his form, Anna was pretty sure he was a perfect candidate for factoring.Anna took the completed form and placed it in her briefcase. Standing up, she reached over the desk and shook Shane's hand. He stood before they shook as well, and then smiled. They said their goodbyes and Jerome 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 felt so drained: he had been flailing helplessly for so long, he just knew his business was going to collapse and probably take him with it. But now, after speaking to Anna and learning all about Factoring, he felt such a huge relief, like someone had just lifted a huge weight off his shoulders. He relaxed into his chair, running his hand through his thick black hair with its telling streaks of grey.All those long, sleepless nights. The sudden panic attacks, not matter where he was. He could feel it all fading away. He wasn�t out of the woods yet, there was still a lot of work to be done, but he could feel it. 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.Jerome couldn�t help but think back to when he had first started the business. At twenty-two and straight out of school he had opened a restaurant. It had been successful. Home cooking in his hometown, and he had done very well.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 Alvarez 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.And then the trucks went down, and his success looked to be in flux. He was nearing fifty. He didn�t think he had it in him, to save this company. 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 want to quit - both for himself and for his staff members.And now, because of factoring, he was sure he wouldn�t have to. Shane's eyes opened, he sat forward in his chair and turned on his computer. He had things to do. He could be thankful later, for now, it was time to work.
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Reasons why Truck Corporations Work with Factoring Firms.
As the manager of your own business enterprise, you may be much more than perceptive already of the hardship in making sure that cash flow issues do not become a dilemma down the line. Anyway, the toughest thing that can quite possibly happen for your company is to find yourself swept up in a long and difficult condition that leaves you forever looking for the funds you necessitate on an on-going manner.
For any sort of establishment in this position, the trouble can come for waiting for work to clear up and actually be paid out into your statement. Bill of sales, checks, and the like could take a while to actually to be taken care of which can certainly leave you with short-term capital issues. The good news is, there are approaches out there for establishments to check out-- and just one of these is factoring firms.
Factoring agencies will, in exchange for your statements, give you with the money asap so that you don't have to fret about the delaying time span that could make paying out the bills and obtaining toolsmore difficult. With this style of setup, invoice factoring can become incredibly practical for several companies who have to avoid a money pitfall which they have gotten themselves in.
Given that, relying on the scale of the project, it can take up to 60 days for a number of businesses to get compensated then it's very important to cover up your own back and definitely not leave yourself resources short to settle the bills. After all, how many enterprises have two months profits just lying there to address all their overheads till they earn?
This is particularly correct of truck firms. They often tend to handle lots of accounts which means a serious quantity of collection time involves company owner themselves. Striving to get compensated promptly can become an extraordinary headache and this is exactly why you utilize trucking factoring agencies who are pleased to help out truckers particularly.
As most of us realize, trucking is an surprisingly enormous market with a lot of companies out there working with hundreds of operators. The sad thing is, numerous of these drivers wind up in income dilemmas given that they are still awaiting work from six weeks previously to actually pay them. When this is the circumstance for a trucking agency, consulting factoring providers for solutions could be the best option left.
This signifies that a truck company can provide the salaries of the personnel, keep all the cars topped off with fuel and continue to scale, progress and expand without continually waiting for the money which is taking too prolonged to come in. Trucking Business enterprises functioning without a factoring system established are leaving themselves at considerable threat, as competitions cash out promptly and proceed to broaden.
There's honestly almost nothing to be distressed about when it comes to using a Factoring firm-- they commonly are not like a bank or a person who is going to leave you with a huge heap of financial obligation to repay. You give them legitimate invoices from job you have already accomplished , you are simply accelerating the repayment process.
In the Usa, where truck agencies flourish, factoring agencies are not considered getting a loan in any capacity. This private settlement then enables both parties to profit and delight in a comfortable future-- it provides the factoring firm a warranted resource of income to include in the list and it offers the trucking firm the needed cash that they sweated to acquire.
The trucking establishment provides their statements to the factoring firm. The trucking factoring provider then receive the payments from the trucking company's customers. Factoring has beenaround for hundreds of years and has been used for long times by a lot of varied sectors-- but none exceeding 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 receiving the resources today and can actually begin putting the resources to operate.
Anyway, an IOU or an invoice is not actually going to pay for costs, is it? For trucking agencies when the income can be very good one day and gone the next, it's up to the drivers to work prudently and to ascertain they are leaving themselves with a notable amount of time and money to get through the week until they are paid once more.
So the next time your trucking business is having some momentary cash flow concerns and you are devoting a lot of time chasing slowly paying clients, why not start off taking into consideration making use of a factoring businesses as a manner to get your money and give yourself a more convenient future in the eyes of your trucking team and your bank difference?
Traditional Bank Loans
Finance through a bank loan is the normal, or traditional, way of financing your business. 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. 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 do not give loans, and the money you get from the Trucking Factoring company does not put you in debt. 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 money you can receive is based on the amount of money you have earned and the accounts receivable you are willing 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. You Won't Incur Debt. You don't incur debt as you do with a bank loan because the Trucking Factoring company actually purchases your accounts receivable. One of the main benefits of this kind of financing is that your business credit rating and your personal credit rating won't be affected. 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. 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 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. You'll receive the 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. Unlike a bank loan that continues to build interest that you have to pay the entire time you have your business loan with a Trucking Factoring company, you don't have to continue to pay interest as they take it right off the top, deducting it from the total amount of accounts receivable. So not only are you relieved of those monthly loan payments, but you also don't have to worry about the building up of interest, as every penny in the account is yours to spend on the business.
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. 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 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. Since these accounts belong to the Trucking Factoring company, this is now their job. 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.
In addition, since the Trucking Factoring company evaluates the credit quality of your customers prior to purchasing the accounts receivable you gain valuable information into which customers are likely to pay and which ones are not so likely to pay.A Trucking Factoring company is not the only method of gaining access to finance for the running and growing of your business, however it does offer a financing option well worth considering.