Factoring invoices is helpful for numerous reasons. It allows a trucking business to raise money without getting new debt. While debt is often needed, most truck companies would prefer to raise cash without obtaining money. Financial obligation is dangerous, and when it can not be repaid, assets can be repossessed. If the debt is huge enough, it could even force a trucking companies out of business.
The Secrets of Making People Like You Get - Choose
An Invoice Factoring Company Instead Of A Typical Bank Financing
Exactly how to Enhance Money Flow Without Borrowing -Cash Money flow is among the main reasons businesses fail.
At one time or another, every company, even effective ones, have actually experienced poor cash flow.
Money flow does not have to be an issue any more. Do not be fooled -- banks are not the only places you can get financing. Other solutions are offered and you do not have to borrow money. What is trucking factoring ? One solution is called best truck factoring companies. Trucking Factoring is the process of selling invoices to a financier rather than waiting to collect the money from the
customer. Oh, the Irony- Trucking factoring has a paradoxical difference:
It is the financial
foundation of many of America's most successful businesses. Why is this ironic ? Since trucking factoring is not taught in business colleges, is rarely mentioned in business strategies and is relatively unknown to bulk of most of American company individuals.
Yet it is a financial process that frees billions of dollars every year, enabling thousands of businesses to grow and prosper. Receivable Financing has been around for countless years. Commercial Factoring Businesses are investors who pay money for the right to receive the future payments on your invoices. An overdue receivable or invoice has value. It is a financial obligation your client has to pay in the near future. Factoring Principals--Although factoring
offers exclusively with business-to-business deals, a large percentage of the retail business uses a factoring principal. MasterCard, Visa, and American Express all utilize a type of factoring in their retail transactions. Using the purest definition of the word, these large consumer finance companies are really just big Receivable Funding Businesses of consumer paper. Consider it: You make a purchase at Sears and charge
it to your MasterCard. The store gets paid almost immediately, even though you do not make payment until you are ready.
For this service, the charge card company charges Sears a fee (typical common normal fees range from 2 to 4 percent of the sale). The Advantages Commercial Factoring can offer many advantages to cash-hungry business. Rather than wait 30, 60, 90 days or longer for payment on an item that has actually currently been delivered, a company can factor
(sell) its receivables for money at a small price cut
off the dollar value of
the invoice. Payroll, advertising efforts, and working capital are simply a few of the business requirements that can be met with instant cash.
Best Truck Factoring Companies offers the ways for a producer to renew stock and make even more products to sell: There is no longer a requirement to wait for earlier sales to be paid. FACTORING is not just a money management device for producers: Practically any type business can take advantage of Accounts Receivable Factoring. Typically, a company that extends credit
will have 10 to 20 percent
of its annual sales tied up in accounts receivable at any given time. Think for a moment about exactly how much is bound in 60 days' worth of invoices: You can not pay the power expense or this week s payroll with a client s invoice, but you can offer that invoice for the money to satisfy those responsibilities. Using trucking factoring companies is a quick and easy procedure. The factor purchases the invoice at a price cut, typically a couple of percentage
points less than the face value of the invoice.
The U.s. Trucking Association
states that there around
195,000 employees with truck
300,000 private companies trucking
firms accredited to
run in the U.S. that transported,
according to their latest listings of millions of
items, materials and
basic materials .
There are a number of typical
teams on our country
roadways transporting these
vital products to our
shops, manufacturing facilities and ports.
Plus truck factoring
countless of them and offer their
including the following states.
Alaska, Arizona, Arkansas,
California, Colorado, Connecticut, Delaware,Florida,
Georgia, Hawaii, Idaho State,Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,
Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska,
Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina,
North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina,
South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia,
Wisconsin, and Wyoming
Life of a Truck driver, like many other professionals can be very challenging, rewarding, and frustrating at the same time. �The com� is an information site for many of the Truckers needs. It is designed to encompass the needs of the Trucker, both on the Road and at Home.
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The largest trucking companies in the U.S. set a revenue record in 2013, but revenuegrowth slowed for the second year in a row.
The combined revenue of the 50 largest motor carriers rose to $106.6 billion last year, according to The Top 50 Trucking Companies list, based on data prepared by Consulting Group in Pittsburgh.
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Searching for the right trucking companies to move your freight can be tough, with the large amount of local, regional, and national truck carriers out there. Center helps make freight shipping simple, finding you the safest, reliable trucking companies every time you ship. Trucking companies are licensed and insured to carry freight safely and efficiently across the country, no matter the size or type of freight you need to ship.Plus, with the high volume of freight we move, we will work to get you the best freight rates possible. Simply enter in a few details below and you�ll see instant freight rates from all the top trucking companies in one easy screen
Since the mid 1980s Garcia Truck & Haul have been successfully running their freight business. They've delivered goods for nearly every major industry in the nation and for 20 plus years, business was booming as they've traversed the country in all weather for all clients. During the heady times from 2002 to 2007, Garcia was a top rated accounts receivable mastermind of the trucking industry. Few customers were ever late on bills and those clients who were, were sure to turn in their late payments within a reasonable amount of time. Cash was flowing and times were good for all.It was just one year later, in 2008, when the economy in the United States took a sharp decline, and both large and small businesses started to notice the squeeze on their pocketbooks: everyone had suddenly gone silent. Business slowed down. Worse still, it was noticed by Garcia in early 2008 that even though most of their loyal customers were on time with their payments, there were a few late bloomers who were starting to spread the disease. And as spring turmed to summer and summer into the early days of fall, Steven Ellis, CEO of Garcia felt a chill go down his spine whenever he would look at the weekly A/R reports. There was a growing list of clients who now owed them back debt.He had gone to his administrators and asked them what the problem had been. Were they doing things different, or wrong, when it came to collecting overdue accounts? When checking his bookkeeper's records this was definitely not the case. Perhaps he was losing his customers to his competitor, who seemed to offer very low prices with no guarantee of quality or performance, and these clients who were in debt to his company had possibly disappeared leaving him stranded. They could not afford to pay him their debt, but they could afford a lesser service, maybe. So he did the necessary research and, after discussions with friends in the same field, he realised that no, his customers hadn't gone anywhere else. The had just gone!.To Steven Ellis the situation looked desperate. Steven was very concerned, because there were constant overheads, goods to ship, employees to pay, and trucks which needed to be maintained, but there just wasn't the money coming back into the business. After work he would confide in his wife, Carol, and neither were unable to stop the constant worry over the lack of funds.""I have a bad feeling, Lin,"" he'd sadly say to his wife.""Well, what do you think it is?"" she would ask.Steven would stare off for a moment and then close eyes. He could see the fleet of trucks he had purchased over the years. He could see them on the road, delivering good to all his loyal customers. But then a haze would cover his trucks and his vast fleet would vanish to leave just a few. Why couldn�t he work out how to resolve this financial problem with his business?""I know what it is,"" Steven said. ""I've relied too long on the profits I receive from invoices alone. For too long I've been allowing our clients to let their accounts become overdue."" Linda could only grab her husband's hand and look at him lovingly, ""it is a hard economy. It might be awhile until things get settled up.
""Steven knew his wife meant well, but he knew that he was responsible for too many people to sit idly by, waiting for the sun to peak over the clouds.The following day Steven walked into his office with a spring in his step, determined to call each and every client who owed money to Garcia Truck & Haul. This wasn't really a very efficient way for a Chief Executive to spend his day, and Steven knew he should be overseeing all the other sides of the business, such as shipments and deliveries, approaching prospective customers, or working with his sales team. Even though he was doing something to help his company, he knew he had folks on salary to do just this thing. Wasting money, wasting time - even with the best of intentions, Steven knew that he was in trouble.
After a half day of contacting debtors in vain - they dodged his calls or promised to call back at worst or made minimal interest-only payments at best - he was about to throw in the towel when his secretary Courtneyerley knocked at his door.
""Steven, can I have a word?"" she asked standing in the doorway.
""Sure thing Courtney, come on in."" Steven leaned back in his chair and looked expectantly at Courtneyerely.""Well Steven, this afternoon I did some research, trying to work out how we are going to get out of this mess."" She pulled a small stack of papers from a folder and set them on the desk before him.""Have you ever heard the word factoring?"" Courtneyerley asked.""It sounds vaguely familiar. What is factoring""? he asked.She began, ""Well, it is really very simple. Basically, factoring invoices means that we would get paid immediately for the loads we haul.""Immediately?"" Steven interrupted.""Yes, immediately,"" she continued, ""it is actually very simple. We can have an expert account manager review our numbers and help us complete a company profile. Included in the profile would be the investigation of our accounts receivable aging reports, our current customers' credit limits etc.. Additionally, the factoring will help to determine the creditworthiness of our customers independent of their credit history with our business. It provides a very broad view.""I see,� Steven said. �And then what?""Following the completion of their review and once we have been approved for a contract with the factoring company, then we sit down to negotiate conditions and terms. There�s a lot of flexibility depending on the business volume and credit histories. The company will advise us the cost to purchase factoring for our company's accounts receivable. The funding commences once we�ve arrived at an agreement.�Leaning forward, Steven studied the documents very closely.""It sounds too good to be true, Courtney,"" he said.""Now, now, I know, I thought the same thing. But really, they have guaranteed us experts that do all the legwork, which would free us up here to focus on our clients in good standing and marketing, all that good stuff. They appear to be very flexible, Steven,"" she drew a circle around a paragraph on the document before him.""How flexible?"" asked Steven.""It seems that they personalize their factoring charges so that the amount they're prepared to work with is commensurate with our client's debt and our needs. Apparently they can figure this all out in two to four days.
""It does all sound pretty good, remembering that we are all tapped out now with loans from the bank last year to repair vehicles, and we all know just how tight money is. it is imperative that we keep the business rolling as usual, and every day we go unpaid we are getting closer and closer to dealing with some serious issues in both the short term and the long term,"" Steven said.He took a deep breath and looked at his secretary with something she recognized as hope.""Precisely�. This could be the answer to our prayers: it will solve many problems we are facing due to these unpaid debts.""Steven took a moment to think about this solution, and agreed with his secretary. The customers who were in debt to Garcia Truck & Haul were professional resources of the company, but they were also long-standing friends. They did not want to throw away these relationships because they were having trouble paying their bills now. He was well aware that the economy was in a bad way and that it might be quite a while before things started picking up. That unknown amount of time could create a disaster situation for both of them if he wasn't careful in how these debtors were handled. Of course he did not want to lose any more money, but he did not want to lose business either.""Let me go over this tonight Courtney, and thankyou."" Courtney nodded, satisfied with her work, and she left the office feeling quite content in the knowledge that she had helped Steven keep the shirt on his back, and possibly hers too.Steven stayed at his desk for a long time, looking over the details they hadn't discussed during their meeting. He wondered if there might be other problems freight factoring could help Garcia Truck & Haul with? With his pencil gliding down the sheet he noticed that the factoring company could help fray the cost of fuel with fuel discount cards and fuel advances. Steven was surprised: it said that his company could get up to fifty percent cash advances on load pickups. Steven was a typical business man: he despised binding contracts that did not allow room to breathe, so he was pleasantly surprised to see that the factoring company did not require a long term contract, that there was no minimum volume required, and that there were no sign-up fees.""I must tell Erik the good news,"" muttered Steven to himself.His son-in-law Erik had liked the idea of Garcia so much and revered his father in law for having such business acumen that only two years before, he had gathered the venture capital to begin his own transportation service company. Steven knew then what struggles Erik would face but he encouraged him nonetheless. With the economy the way it was, if an established company such as Garcia was struggling then the little guys, like Erik, were going to be in even more trouble.
But, an antidote may have been found in freight factoring and Steven was soon to find out.Some months later, having successfully gone through the entire process of the application, having experts study his credit history and statements and review his accounts receivable, Steven found that he was starting his journey out of the despair which had been created for him by his delinquent account holders.They adopted reasonable factoring purchase contracts and stopped wasting their own precious time trying to collect debts. They used that time to refocus their efforts in being competitive in new territories. Steven looked back on the dismal months of life before freight factoring and almost shuddered at the thought. He probably wouldn't be in business today had he not learned just in time about freight factoring.
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Best Invoice Factoring Company
Factoring in the Future of a Trucking Business: A Story The phone was ringing on his desk, and Michael Jones just sat there letting it ring. His morning coffee cooled and his cigarette smoked away in the tray: Michael is thinking, and pondering the biggest decision he's ever had to make for his trucking business. Jones Trucking Company was at a turning point of growth and Michael had to decide if signing with a factoring company was the right way forward.
Michael�s father had started as an owner-operator and had grown Jones Trucking Company into a fifteen trailer fleet over forty years. There had been some hard times when it seemed everything was going to go under and even Michael�s mother strapped herself into a cab to make hauls. His father had lived long enough to witness the price of hires drop during the recession and watch the eruption of fuel prices afterwards. Now the company was solely in Michael�s hands and he wanted to live to see it in better shape for his sons.
There just never seemed to be enough money to go around, and certainly no spare cash, but to move his company successfully into the future he needed a steady and reliable cash flow. His employees needed to be paid. They had families and household bills too. Some of the refrigerated trailers were in need of repairs and he felt to stay competitive it was also a good idea to invest in specialized haulers to be ready for the constant requests he was getting for loads of new energy and agriculture equipment. Every time he had to turn down a request, Jones Trucking looked weak in a very strong market.
He knew what his father would have said - 'wait, take your time before adding new technology'. Michael allowed himself a good hard chuckle. He remembered when his father was totally against installing GPS units in the cabs. He would say, �Why do you need the voice of some woman to tell you to get off at an exit that has been the same exit that has been there for years?� He smiled to himself as he remembered his father poking fun at the other drivers who switched to automatic, even though automatic was quite obviously more efficient (though less manly). His father days were long gone and technology was actually an important improvement for the business such as having Qualcomm to cut down on fruitless time communicating on the phone for bills of lading.
Michael believed a successful man is always thinking of his next step. What would be the next step for Jones Trucking? And how would he be able to afford it? Funding was all tied up in the mortgage for the office and garage and in the fuel bills. Thankfully he'd just finished paying off the bank loan for the installation of satellite radio in the trucks.
He wondered about factoring - was this the answer for him? There was a lot he didn�t understand about the process. It sounded a lot like ninth grade algebra which just didn�t feel like it belonged as part of the trucking business. Factoring companies buy your invoices and manage your accounts receivable for a certain percentage of the invoiced amount. In return, the factoring company pays the trucking business straight away, providing immediate cash flow for the business to pay staff, purchase fuel, and do any repairs or maintenance. Without this assistance, you're placed in the position of waiting for payment from your customers, and this can often be thirty days, or more. In those 30 days, a trucking company can�t pay its bills and employees in invoices.
Now it was time for Michael to do his homework. He had heard of companies charging for same day money transfers, advancing a percentage of the money owed to your business, while the rest is held in a private account if the bill wasn't paid within sixty or more days. Worse still, if the customer defaulted on payment, the factoring company takes it out of the money supposedly coming to you! Through the grapevine, he�d also heard about how some companies suddenly slipped you onto a sliding scale of percentages even if you had already signed a lengthy contract for maybe 3% or 7% so there you are with 10% coming as a cost to you out of the freight bill. His friend Ronnie who had a trucking business in Missouri, was run nearly into the ground by a factoring company that charged him the full freight bill on top of the factoring fees. Well, what was the point of going to a factoring company if there was shady business like that going on?
But it turned out to be quite easy. All the factoring companies he researched were open about their business practices and very friendly on the phone when he called. Customer service appeared to understand their company and explained in clear, concise English exactly how it all worked. He didn�t mind signing an exclusive contract. He liked the idea of a long term commitment so he knew he wouldn�t have to bother going back and forth to different companies and wasting time filing more forms. Nobody charged him for credit checks and they offered him a fuel advance on the pick-up of the load. Many companies offered a non-recourse factoring program that suited him just fine. He was more than happy with the figures he was offered in percentage terms on the freight bills. It sounded like a great scheme to him.
It was really refreshing dealing with the factoring people. They were more personable than those loan managers at the bank. He was relieved to note that the factoring companies understood the trucking business and discussed business with him like a respected client, not like someone looking for a handout. The factoring companies didn�t worry over his credit and the debt troubles his father had had in the past of the company. All the factoring company was interest in was the credit of his customers and on their reliability: this worked great for Michael because he and his father had created a very strong and loyal list of clientele over the years. So he knew they would understand when the factoring company contacted them for the invoices. His clients would not have any problems, nor would they think poorly of Jones Trucking, because the factoring companies handle themselves in such a polite and professional manner, similar to the way his father had managed the business in the past.
Michael stepped out of his office to let his secretary know to expect the arrival of the factoring contract shortly. He felt exhilarated by the new possibilities that would make the future of the company fun again and put the stress of the difficult times behind him. He suddenly realized that, with this new cash flow, he could actually expand Jones Trucking Company and who knows, move into Canada, which had always been his dream. He was a happy man again knowing that he had just made a decision which would guarantee the success of his business and his sons would not be inheriting a financial mess.
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Best Invoice Factoring Company
�So It is not a loan?� asked Stephen Ramirez, reclining back into his chair and crossing his legs. The woman sitting across the desk from Stephen smiled at him, shaking her head.�No, not exactly,� she said.Stephen Ramirez owned a small trucking company, and his business had recently fallen on difficult times. Certainly the trucking business can be an extremely profitable venture, and for many years it had been that way for Antonio. He named his business Turner Trucking, named after Lloyd and Felix, his two grandfathers. They had both been hardworking men, and had done a lot to make Stephen the same.Disaster had struck half a year ago, when two trucks in Antonio�s fifteen truck fleet went down. One was a roll-over and ended up in the trucking graveyard: the other was involved in a serious and costly accident. The financial security of Antonio's company relied on his full fleet on fifteen being on the road, and missing two trucks was just devastating . Furthermore, buying a whole new truck and fixing the other simply took more cash than Stephen had on hand.Paying of bills in the trucking industry is always a major cause for concern for businesses.
Waiting a month or longer for bills to be paid was quite normal. This system works okay as long as no problems arise, but if they do, then things can get quite sticky.Stephen was an excellent business man, and he certainly hadn't done anything wrong. Things had happened that he could not have predicted, and he had to figure out a way to keep his business from hurting, or even going under.That�s where the woman across the desk came in. Her name was Stella and she worked for a factoring company. He had accidentally come across her company one night when he was working late, searching the internet to see if there was some solution to his financial dilemma.Stella explained. �it is really not a loan at all: we actually buy your accounts receivable. We aren�t giving you money to be paid back later, we�re buying something from you, and you can buy it back when you can. That way we�re protected from a complete loss, but you�re protected from the outrageous fees you would find in a loan from the bank.Stephen agreed. It sounded good to him, almost too good.Stella laughed. �I'm not sure that you believe me,� she said.�No, I do, I just think it sounds a bit too good to be true. I thought I was going to lose my company.�Stella smiled, agreeing. �We get that a lot. There's no way we want to see you lose your business. We know how hard you work, and that you've invested everything in your business. Sometimes you need help. That�s what we�re here for.""In any case, thank you for coming to see me.""It�s right down the road, usually we do it all online, but I didn�t mind swinging on by today,� Stella said with a smile. �Let�s see what we can do to help you.�And right there and then they created a business profile. Stephen completed the form, with Stella offering advice as needed.
The profile filled Stella and her company in on Antonio�s company, and would help them determine if he was suitable for factoring. Unfortunately, not all companies are. Some were beyond factoring special brand of help, and sometimes things weren�t even dire enough for it. Listening as Stephen filled out his form, Stella was pretty sure he was a perfect candidate for factoring.When the form was done Stella took it and slid it into her briefcase. Standing up, she reached over the desk and shook Antonio's hand. He also stood up, and they smiled at each other. They said their goodbyes and Stephen walked her to the door, and then returned to his office.All his staff members were there, all seven who worked in his office. Sitting behind his desk once more he could hear the familiar sounds of his office workers going about their daily business.He leaned back and closed his eyes. He felt so drained: he had been flailing helplessly for so long, he just knew his business was going to collapse and probably take him with it. But now, after speaking to Stella and learning all about Factoring, he felt such a huge relief, like someone had just lifted a huge weight off his shoulders. He sat back in his chair and ran a hand through his graying but still thick black hair.The long nights, where he couldn�t sleep. The sudden panic attacks, not matter where he was. He could feel it all fading away. He knew it wasn't over yet and that there was still a way to go, but he could just feel everything start to change for him. He was there, he was on the right path, and he was working to make things right.His mind wandered back to the very beginning, when he first started his business. At twenty-two and straight out of school he had opened a restaurant. It had been really successful. Offering home cooking in his own hometown, his business had really prospered.But it wasn't what he really wanted to do. His passion didn�t lie with the food industry. He thought long and hard, and then he decided to sell the restaurant. He took half a year off, and in that time he thought to start Turner Trucking. And that's exactly what he did. Once again he built a company from the ground up. The business had been an instant success.And then the trucks went down, and his success looked to be in flux. He was nearing fifty. He was concerned that he just did not have the energy left to try and save the business. But he couldn�t give up. The idea of cutting his losses, shutting down, laying off his workers, it actually made him sick some nights. He didn�t know how to say quit.And now, because of factoring, he was sure he wouldn�t have to. Stephen opened his eyes, sat forward, turned his computer on. He had things to do. He could be thankful later, for now, it was time to work.
As the operator of your own firm, you may perhaps be much more than aware already of the difficulty in making sure that capital issues do not become a dilemma down the line. Anyway, the most awful thing that can potentially develop for your company is to find yourself dragged in a long and difficult situation that leaves you forever looking for the resources you really need on an ongoing manner.
For just about any enterprise in this scenario, the complication can come for waiting for work to lapse and actually be compensated into your bank account. Invoices, checks, and the like can take some time to actually to be taken care of which may leave you with short-term cash flow dilemmas. Fortunately, there are approaches out there for companies to examine-- and just one of these is factoring providers.
Factoring firms will, in trade for your accounts, offer you with the cash asap to ensure that you do not have to worry about the waiting duration that could make paying off the bills and getting materialsmore difficult. With this style of arrangement, invoice factoring can end up being incredibly valuable for countless establishments who need to get out of a cash pitfall which they have discovered themselves in.
Since, basing on the size of the task, it can take up to 60 days for some companies to get compensated then it is vital to cover up your own back and certainly not leave yourself funds short to pay off the expenses. After all, how many establishments have two months cash flow just occupying there to address all their costs till they earn?
This is especially correct of trucking establishments. They have the tendency to manage bunches of statements which means a huge volume of collection period entails company owner themselves. Making an effort to get paid out in time can turn into an extraordinary struggle and this is the key reasons why you use truck factoring companies who are happy to help out truckers particularly.
As most of us understand, trucking is an astonishingly huge field with many companies out there employing hundreds of vehicle drivers. Regrettably, many of these drivers land up in income problems considering that they are still expecting work from six weeks ago to actually pay them. When this is the case for a truck agency, depending on factoring companies for solutions maybe the most suitable alternative left.
This implies that a trucking organization can pay out the salaries of the personnel, keep all the trucks refilled with fuel and continue to go up, flourish and expand without always waiting for the income which is taking too lengthy to come in. Trucking Enterprises running without a factoring system applied are leaving themselves at substantial danger, as competitions cash out promptly and go on to grow.
There's absolutely not a thing to be distressed about when it comes to making use of a Factoring company-- they typically are not like a bank or a person who is going to leave you with a massive pile of personal debt to pay back. You give them legitimate invoices from output you have already finalized , you are only quickening the payment system.
In the United States, where trucking establishments thrive, factoring enterprises are not considered getting a loan in any capacity. This confidential agreement then enables both parties to make money and delight in a convenient future-- it provides the factoring provider a warranted asset of income to add to the list and it furnishes the trucking business the needed money that they worked hard to generate.
The trucking establishment provides their invoices to the factoring establishment. The trucking factoring provider then take the payments from the trucking company's clients. Factoring has been in existence for hundreds of years and has been adopted for several years by several varying fields-- but none exceeding so than truckers. While you might possibly miss out on a small part of the money, something like 1-3 % depending on who you deal with, it implies that you are obtaining the resources today and can actually begin setting the funds to operate.
Once and for all, an IOU or an invoice is certainly not going to pay for overheads, is it? For trucking establishments when the income can be very good one day and gone the next, it is up to the drivers to work sensibly and to ascertain they are leaving themselves with a notable measure of time and finance to get through the week up until they are paid for once again.
So the next instance your trucking establishment is having some temporary capital problems and you are investing way too much time chasing slowly paying clienteles, why not start looking at employing a factoring companies as a way to get your money and give yourself a more convenient future in the eyes of your trucking crew and your bank balance?
Bank loans are an extremely traditional way for a business to get financing. These loans can be a life-saver, but they're not always available to every business. For example, a fairly newly established business simply may not have the assets to readily get a loan from a bank, even if they do, the standard collateral for a business loan is the business itself, which means that if you cannot make your loan payment, you risk losing your entire business. In addition, while you apply for a certain loan amount, that is all the financing you are entitled to. Of course, once that loan has been re-paid, you can always re-apply for another loan.
What Are Trucking Factoring Companies?
Trucking Factoring companies do not offer loans, and you do not go into debt when you get money from a Trucking Factoring company. Rather the financing you receive from a Trucking Factoring company is based on money your business has already earned, but have not yet received. Trucking Factoring companies actually purchase your accounts receivable or at least part of them for a percentage of their total worth, Normally around 80%-95%. The amount of money you can receive is based on the amount of money you have earned and the accounts receivable you are willing to �sell.� Once you have set up Trucking Factoring account it continues as long as you wish it too and the amount of money available to you even can grow as your business grows, giving you the ready cash you need to meet your own obligations.
Benefits of a Trucking Factoring Company Vs. A Bank Loan
Not every business can benefit from Trucking Factoring account financing because you have to have a business with accounts receivable, however there are many benefits for those who can access this type of finance.
1. You will not Incur Debt. You do not incur debt as you do with a bank loan because the Trucking Factoring company actually purchases your accounts receivable. One of the main benefits of this kind of financing is that your business credit rating and your personal credit rating will not be affected. In the event that your business fails, you would not have to be concerned about someone coming after your personal or your business assets in order to pay off a loan. With a bank loan, the debt goes onto your credit report, and even one late payment can adversely affect your businesses credit, and even the ability to get insurance and may even reflect upon your personal credit rating.
2. No Collateral Required. Another benefit of using a Trucking Factoring company instead of a traditional loan is that you are not required to provide collateral to the Trucking Factoring company in order to secure financing, because the company �buys� the accounts receivables; not loans you money based on them. In addition, while the Trucking Factoring company does run a credit check on your customers whose accounts receivables are offered for financing, the state of your credit is not an issue. This means that it is easier for new businesses to access the finance they need through a Trucking Factoring company, providing their accounts receivable are in good order. A bank may believe you haven't been in business long enough to be able to cover this risk.
3. You'll receive the money faster. Using a Trucking Factoring company means that you'll get the finance quicker. The money will normally be in your account within 24 hours, once the Trucking Factoring company is confident that your customers� accounts are likely to be paid. Borrowing from a bank begins with vast amounts of paperwork, the loan must be underwritten, and this can take ages before you're notified if the loan has been approved.
4.You receive interest up-front. With a bank loan interest continues to build, and this has to be paid the whole time you have a business loan; however with a Trucking Factoring company there is no interest - they take it right off the top by deducting it from the total amount of receivable accounts. So you do not have to worry about monthly loan repayments, and you do not have to worry about the amount of interest payable, because all the money in the account is yours to spend.
As you can see, there are several benefits that makes considering financing through a Trucking Factoring company over a traditional bank worthwhile. In addition, there are other benefits that a Trucking Factoring company can offer you, outside the scope of a bank. The main benefit is that once you've sold your accounts receivable to the Trucking Factoring company, you are free from having to collect money owed by your customers. Since these accounts belong to the Trucking Factoring company, this is now their job. Trucking Factoring companies are very efficient at debt collecting, and this frees up your valuable time to devote to running your company.
Another bonus is that, because the Trucking Factoring company has evaluated the quality of your customers' credit before buying the accounts receivable, you learn valuable information regarding your customers, like which ones are likely to pay, and which ones are less likely to pay.A Trucking Factoring company is not the only method of gaining access to finance for the running and growing of your business, however it does offer a financing option well worth considering.