Staying competitive is always the secret to being successful in any business.
It is often difficult to be competitive, however, if you do not have access to all of the right resources. For instance, it is difficult to take on a new and bigger delivery customer if you do not have enough drivers and trailers. By the nature of the business, for example, a trucking company does not receive payment until goods are delivered. Before that delivery, however, there are many significant expenses. Fortunately, a number of freight broker factoring programs provide the financial capital that is often needed. Operating as a source of rolling credit, freight broker factoring programs provide access to capital that allows companies of all size to bridge the gap between up front costs and the payment of accounts receivable.
Freight Broker Companies Offer Their Services to Companies of All Size
Freight bill factoring companies can help small businesses bridge invoice payment gaps with upfront payments that are as much as 90% of the original invoice. Also known as advance business capital factoring, the freight broker factoring programs that are offered are seen as low risk ways to get short term access to needed capital. In fact, as reported by the Wall Street Journal, the factor advances most of the invoice amount, typically between 70% after 90%, only after checking out the credit-worthiness of the billed customer. When the bill is paid, the factor remits the balance, minus a transaction, also called a factoring, fee.
The latest research indicates that there are as many as 12 million trucks, rail cars, locomotives, and vessels moving goods over the transportation network. Behind every one of these transportation methods there is a vast array of expenses. From the cost of fuel to the salaries for the drivers to the acquisition and maintenance of the semis and trailers themselves, the trucking industry is big business. Often working as private contractors or as drivers who are easily recruited by other companies, these over the road warriors have to be paid on time. Meeting these payroll timelines, however, can be a challenge when the delivery your company provides is just a small portion of the much larger transportation process. As a result, the trucking company itself may not receive payments until days, sometimes weeks or months. For this reason, the use of the best freight broker factoring programs allows companies to gain the access they need to the capital that will allow them to wait for customer payments are received.
Many individuals understand the lag that can sometimes occur between when bills come due and when paychecks are deposited. Imagine this gap on a much larger scale and you begin to see the challenges that face many trucking companies. In an effort to remain competitive, it is important for trucking companies to grow the number of drivers, trailers, and diesel trucks that they have to get the contracts of the best clients. Finding access to the money on a short term and revolving credit format is what factoring companies can provide. These advance capital companies understand the trucking industry and know how to assess the credit-worthiness of a businesses customers. The short term loans become a long term solution to a business model that fluctuates greatly between bills for maintenance and driver salaries that need to be paid and the long wait that often occurs for when customers are billed and eventually pay.
Before the pandemic hit, there were nearly 28 million small businesses in the U.S. Today, those numbers are dropping. And while it is individually devastating for a small clothing boutique or restaurant to go out of business, the threat of a transportation company not being able to provide its services could be financially devastating to an even bigger segment of the country. Most recently, the retail reports indicate that October should be the new December for those folks who are going to try to start checking things off their Christmas list. In a time when it is more and more common to walk into a favorite retailer and see much emptier shelves, it should come as no surprise that there is there is an even higher demand on the transportation services in this country.
