If you are in the transportation industry this article is for you!
Although the recession has formally finished, the credit crunch that started with the recession is still ongoing and will continue to be so for the direct future. Though some banks are loaning more, in most cases, getting business financing continues to be very difficult. This can be especially true for transportation companies and unlikely to change in the near future due to the fact a number of lending establishments are still in trouble themselves.To meet the criteria for bank or institutional financing the carrier requires to show a few years worthy of profitable operations, strong growth, strong assets and have a good management structure set up. The fact is that, few of the carriers and brokerages that weathered the recession will be able to meet all these standards. Luckily, conventional business financial loans are not the only capital option for this industry. And most of the time, it might not bethe best option either.
Almost all freight carriers and brokers experience cash flow problems because they cannot afford to wait 30 to 60 days for customers to pay their freight bills. Most transportation companies have heavy continuing expenses – there are drivers to be paid, trucks that need repair and a number of other costs. It’s not unconventional for undercapitalized carriers to run into cash flow difficulties simply because they can’t afford to wait for their freight bills to be paid. One way to fix this problem is to implement a freight bill invoice factoringprogram.Freight factoring
solves this cash flow difficulty by providing you with an advance for your freight bills. As an alternative of waiting 30 to 60 days to get paid by the shipper, you may get up to 90% right away from the factoring company. This offers you with the cash you need to pay your drivers and cover your business costs. When your shipper pays the bill in full, the factoring company refundsthe remaining 10%, less a small financing fee.
One of several advantages of freight factoring is the fact that it is fairly easy to acquire and it will not have the troublesome qualification requirements of conventional business financing applications. The most important variable for qualifying is having customers with good commercial credit. This is your most important collateral from a factoring standpoint. Additionally, the business and its owners need to be free of legal and tax problems. This makes freight factoring an accessible solution for new and established freight companies that are looking to grow.