You decide whether to use invoice factoring as a one-time solution for a quick payout or you may plan to use invoice factoring regularly to simply speed up the payment process.Īnother benefit of invoice factoring is that it provides lower associated costs than traditional financing. You can decide how many invoices you would like to submit to the invoice factoring company. Invoice factoring plans are generally done on an invoice-by-invoice basis, therefore, there are no long-term contracts involved. Invoice factoring companies also provide you with a great deal of flexibility. These are major responsibilities (and potential headaches) that you no longer have to worry about, freeing up your time to focus on other tasks. Thus, the invoice factoring company then handles the general accounting responsibilities associated with that invoice, such as collections and accounts receivable. Once you have engaged in an invoice factoring plan it is as if you assign the associated invoice to the invoice factoring company. Invoice factoring also saves your company time and stress associated with collections. In fact, it is likely that your client’s credit history may have a greater impact on your eligibility for an invoice factoring plan than your own credit report. In addition, your eligibility for an invoice factoring plan is not heavily influenced by your company’s credit history (or lack thereof). Invoice factoring is essentially an advance of the money your client already owes you, as opposed to a loan that is not associated with a guaranteed cash flow. Additionally, invoice factoring allows you to get immediate funding even if your trucking business has bad or no credit. Why You Should Use an Invoice Factoring Companyįirst, as discussed at length, invoice factoring provides you with immediate cash flow. Invoice factoring can help you get the money you need when an unexpected cost comes up.
If you haven’t had the opportunity to save sufficient funds your trucking company may find itself in a bind. Every business experiences some sort of unexpected expense at some point. Utilizing invoice factoring services helps you get the money on hand to achieve your business goals.Īdditionally, emergencies can’t wait. This cycle is preventing you from ever accumulating the capital necessary to grow your business. You may also find yourself stuck in a cycle of waiting for payment, then having to use that payment once it comes in to fund future loads. When you have to constantly wait for payment from loads already delivered it can be difficult to save up the capital necessary to expand. Whether you are looking to expand your fleet, take on additional loads, hire more drivers, or invest in additional marketing and promotional work, your trucking company requires cash. Quicker payments also help improve cash flow and allow your business to operate in a more efficient manner.Īnother major benefit of invoice factoring is the ability to allow your business to grow. This allows you to ensure you have sufficient funds on hand to cover costs such as fuel, vehicle maintenance and repair, containers, drivers’ payroll, licensing fees, and insurance expenses. The most obvious method in which invoice factoring can help your trucking business is by providing you with cash from the loads you deliver faster. How Can Invoice Factoring Help a Trucking Business? And finally, your client pays the invoice amount directly to the invoice factoring company. The invoice factoring company will then send you the advance by money wire or direct deposit. The trucking company then sends the freight bill to the customer and submits a copy of the freight bill to the invoice factoring company. First, the trucking company delivers the load to their customer as they normally would. Most invoice factoring plans follow the same basic outline. Invoice factoring is simple and easy to utilize. The trucking company can then use that money for whatever purposes they need, such as covering payroll, taking on more loads, or expanding their business. Invoice factoring companies provide trucking companies quick payment on their unpaid invoices, in exchange for a small fee. Invoice factoring allows trucking companies to immediately receive payment from unpaid invoices. One method available to trucking companies to address this issue is invoice factoring. For trucking companies who are trying to get established or expand their operations and need money sooner rather than later this delay in payment can pose problems. Freight bills can oftentimes take up to two months to be paid out, creating a significant delay for trucking companies from the time they deliver a truckload to the time they are paid for that delivery.
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