Freight Factoring Helps Trucking Companies When Business is Slow
Updated: Sep 14, 2020
It's no secret that demand in the trucking industry fluctuates from year to year, season by season. If you're an experienced driver, you are probably used to the freight industry's ups and downs. Many truck drivers have survived the trucking market's hard times, but some aren't as lucky. Some owner-operators park their trucks instead of taking loads to avoid losing money when business is slow.
During these slow times, cash flow is vital and is what keeps you in business. This is where freight factoring comes in to play for your trucking business. Freight bill factoring, also known as trucking factoring, is one of the most popular methods for truck drivers to finance their companies and avoid cash flow issues. This article will provide you with information on how truck factoring helps your trucking company when business is slow.
Freight factoring provides you with immediate cash for the loads you haul
Experienced drivers know all their expenses down to how much it costs to turn on their truck's engine. When demand is down, and they are spending less time on the road, they know that they may have a more challenging time finding the cash for their fuel costs, insurance, or maintenance.
Typically, it can take a freight broker anywhere from 30 to 90 days to pay for a load, but the payment terms could be extended when the industry is down. A freight factoring company advances you the invoice's cash within 24 hours, minus the factoring fee. Even if you are more selective on what loads you haul and aren't on the road as often as you were before, you will always have access to your working capital with freight factoring.
Trucking factoring is flexible
Depending on the factoring company you work with, you can factor as many or as little loads as possible. When you use accounts receivable financing, you get cash on hand whenever you submit your freight invoices. This lets you confidently accept loads knowing that you will have money for fuel and other expenses while on the road.
You'll also get other factoring services when you work with a factoring company. When you factoring with Porter, you get a fuel card with advances and discounts, access to our freight database to find the best loads, and a factoring representative that works directly with you and your business.
You incur no new debt with freight factoring
Expenses don't stop just because business is slow. Many carriers use credit cards to pay their bills, which isn't bad if you know you'll have the money to pay off the credit card in the next month. This issue with this is if you aren't moving a lot of freight, you may not have the adequate cash flow to pay those credit cards off, which will hurt your credit history.
When you freight factor, there is nothing you need to pay back. You submit your freight invoices, the freight factoring company advances you the money, and then the factor waits to get paid by the broker at the end of the set payment terms. There is no risk of hurting your credit score, and there is no need to have added debt when business is slower than usual.
Instead of worrying about where your next paycheck will come from or how long it'll take to get paid, work with a freight factoring company. Even when business isn't slow, partnering with a factoring company is beneficial for your trucking company. You'll never have to worry about having consistent cash flow or having enough funds to cover your fuel cost. You have the comfort of know that you will always get paid in 24-hours on every freight invoice you submit.
For more information on how you can start factoring your freight invoices, learn more here or call us today at (205) 397-0934.