Nearly 12 million trucks, rail cars, locomotives, and vessels move goods over the transportation network. All of these translates to invoices at the end of the delivery which takes about 90 days to be paid. While some trucking companies are patient enough to wait for the invoice to mature, others are considering keeping their cash flow constant.
This means quickly converting those invoices into immediate cash to meet regular demands such as fuel, tires and general truck maintenance. And this is what is referred to as invoice factoring. It is a type of accounts receivable financing that converts outstanding invoices due within 90 days into immediate cash for your small business.
Load factoring companies help small businesses bridge invoice payment gaps with upfront payments up to 90% of the amount in cash within a few days. For a trucking operator, it’s vital to find the best invoice factoring company that gives you access to reliable cash flow needed for business operations.
Choosing a Reliable Freight Factoring Company
With plenty of truck factoring companies, approach your search with caution. Find a factor that can help you remain competitive in the ever-competitive transportation and logistics industry. In addition to freight factoring services, rates and plans, here are other key essentials to look for in a factoring company.
- Instant invoice conversion
The best load factoring companies will ensure you have access to cash flow in less than 24 hours. This is particularly important if you have other loads to move and deadlines to meet.
- Less bottleneck procedures and quick approval
You shouldn’t have any problem being approved by most of these load factoring companies provided you ascertain that your customers are creditworthy. This is even after been denied cash by traditional lenders. The application process is supposed to be quick and easy. Many factoring companies have even abolished application and setup fee to make the process much faster for truckers who seek invoice factoring services.
- Designated contact person
Load factoring companies use account managers as link to trucking companies. Ideally, when factoring company freight you are assigned an account manager who runs everything on your behalf. The communication between you and the account manager should be clear and any questions or concerns have be addressed before any dealings.
- Recourse and Non-Recourse Factoring
As a truck operator or owner, you must be allowed to choose between the two basic kinds of transportation factoring, which are recourse and non-recourse. A recourse factoring makes you the (trucking company) liable for any paid invoices while a non-recourse factoring transfers the liability of unpaid invoices to the factor.
So before choosing any of these two factoring options, let the company discuss each in detail and allow you the chance to decide what suits your business interests. Of course, the cost for a non-recourse will be slightly high than a recourse factoring because it’s considered a high-risk transaction.
- Additional trucking factoring services
The top transportation factoring companies offer additional factoring services for both large and small fleet owners. Some examples of these services may include:
- 24/7 online account and mobile access
- Complimentary load board access
- Trucking business insurance, loans and financing
- Free credit checks
- Effective collection of receivables
- Discount fuel card program
- Flexibility of load factoring companies
Funding on copies should be made easy by allowing faxes, copies and scans instead of exclusively demanding for original copies. It takes a lot of time and money to prepare and submit originals for funding.
- No-minimum factoring plan.
With this kind of plan, you can finance any volume of invoices and choose your preferred time to factor them. Flexibility is everything in the load factoring business, therefore go a freight factor that’s willing to accommodate your terms.
Finally, many freight factoring companies also offer fuel advances. This important if you need cash in hand to keep your fuel tank full and ready for the next load. You can also opt for a fuel card which is less costly and allows you to purchase fuel at more affordable rates. Be sure to read and understand the contract terms and if possible, enter into a month-to-month agreement. It’s a lot more flexible and you can subscribe to a new factoring company fast after your current contract expires.