No matter whether you’re running a small or big company, transportation firms should cover expenditures to survive in the business. It is very common for trucking firms to struggle with due invoice payments, often 1 to 3 months or even more. For small to medium sized companies facing slow season or erratic season, cash on hand can save from sinking into debt.
Transportation Always Plays a Crucial Role in Growth of Economy
Transportation has always impacted the economy; growth in transportation industry has led to better economy in many ways. Bulk orders for business purposes are usually transported through trucks, and even the trucking sector is witnessing tremendous growth. Due to the fact that trucking business can be started easily, and investment is easy to generate, people consider starting a new company with just a few trucks.
When there’s a big time lag in clearance of invoices, factoring can help a business in procuring essential supplies and covering the other expenses right away, and ensuring smooth functioning. Like any other business, not all transportation factoring firms provide the same level of service.
An experienced factoring firm must have enough knowledge to offer you a detailed quote following a phone call. Before you dealing with them, you must know how long they’ll take to factor your first invoice. If you find their process is filled with time-consuming formalities, it is better to look elsewhere, because you’re factoring the invoices only because you can’t afford to waste any further time.
A good factoring agency should be able to give you cash within a few days, unless the accounting process is very sloppy. The firm should be more worried about the reliability, and dependability of your customer instead of your personal credit or business loans. There would be some minor inquiries about your firm’s financial status, but they should be more focused on your clients. In short, they should focus solely on your target market, and take decisions based upon the credibility of your firm and future receivables, and not your past credit history, because your credit score could have been impacted due to delays in clearance of invoices from your client’s end.
A reliable and good transportation factoring firm should let you modify your credit line, as per your business needs rather than their requirements or forcing you to take monthly invoice amount according to their guidelines. Few firms may charge upfront fee and you must inquire about all such details upfront, before signing any documents.
Additional Perks to Consider
The factor firm requires knowing whether or not your customers are reliable and you may have to help them in this in-depth credit analysis. The company should help you with your collections, such as mailing and processing invoices and assisting you in manage your account receivables completely. You should make sure that all details collected by the factoring firm about your clients are equally accessible to you as well.
Once you get your first invoice, factoring firm will provide you immediate funding for services that you’ve just provided. A good factoring firm should be able to provide services to your company, regardless of the brand, status, or size. They should also help your business throughout the process.
Also remember to choose a company that provides fuel cards and insurance too, because with fuel cards, you get rebates at truck stops, and insurance covers all the liabilities.
Robert Beard works for Pay4Freight, and sharing his personal experiences, he says that our company Pay4Freight works in the transportation factoring industry and helps the trucking business.