Trucking companies keep our economy moving by transporting goods all over the country. Today, I want to show you how transportation companies can use factoring to solidify and build their businesses. So whether you are a brand new trucking company with one or two trucks or a company that has been around forever with a huge fleet, let me show you how factoring can benefit you.
What is factoring?
No matter if you call it freight bill factoring, freight factoring, truck factoring or transportation factoring, factoring basically works the same way. Simply put, accounts receivable or invoice factoring is the sale of your uncollected invoices for a discounted rate. It is not a loan. The factor buys your invoices at a discount and pays you a percentage of the face value upfront. The factoring company then takes on the burden of collecting the unpaid invoices. Once the invoices are fully collected, the factoring company pays you the rest of the contracted amount.
How Does This Benefit A Trucking Company?
Let me explain how this works with a little story. “Big Load” Trucking Company transports many loads across the country. They drop off the goods and wait 30 to 90 days to collect payment on the invoices. In the meantime, they run many more loads and have to put gas in their trucks, keep them serviced and pay their employees. As they are waiting to get paid, they are laying out a lot of money for operating costs. In simple terms, factoring gives you cash flow immediately to operate your business. It eliminates the 30 to 90 day waiting period. Many times you can get your payments within 24 to 48 hours of contacting the factoring company.
How Much Does Factoring Cost?
Now I can’t speak for every factoring company, but I can tell you what Meritus charges. Normally we pay you 97% to 99% of the face value of your invoices. We give you 70% to 80% upfront and the remainder when the invoices are collected. Plus, you don’t have to collect the invoices yourself. We do all that for you. All you have to do is keep moving loads and getting paid.
This cash flow enables you to expand your fleet, hire more drivers, eliminate unnecessary accounts receivable positions, maintain your rigs, etc.
Is It Worth It?
Our clients think so and here’s why. They find that consistent cash flow reduces stress and allows them to focus on the most profitable task of moving more goods. As you know, transporting more loads means generating more revenue for your trucking company.
How Can I Get Started?
Give us a call at 800-544-3050 or fill out this easy contact form. Once we talk and get the details of your situation, we can give you exact costs and time frames specific to your company. I look forward to hearing from you.