Manage Cash Flow Through Freight Factoring

In trucking, the statement of cash flow is a key document that reveals a great deal about your business and whether or not it’s positioned for success. Everyone knows that it’s impossible for any business to get by without proper cash flow, and this couldn’t be truer than in the challenging industry of trucking and transportation. With so much overhead, including fleet maintenance and driver salary and benefits, trucking business owners often find it difficult to keep cash moving.

Cash flow — simply put — is the relationship between incoming and outgoing funds associated with your business. Incoming cash flow includes customer payments, while outgoing cash flow represents your expenses or the money you pay out to maintain your trucking business. In a perfect world, cash would flow into your business faster than it flows out. Of course, this rarely happens in the world of trucking and transportation because there are numerous expenses that pop up requiring immediate payment.

By contrast, the invoices you submit to customers don’t get paid with the same speed and you must sometimes wait one to three months before you see any payment. This can cause incredible cash flow issues for fleets of all sizes because although you invoiced your customer, the invoice is not actually considered income (and won’t positively contribute to your cash flow) until it’s been paid. If you run a trucking company, it’s impossible to pay your bills with an outstanding invoice, but you still need cash on hand to take on new customers and make regular deliveries.

This is why so many trucking and transportation companies are using freight bill factoring to level the playing field. An unpaid invoice is not helpful to a trucking company owner, but factoring is a process that allows you to sell those invoices at a discount for cash upfront when you need it. With upfront, scheduled expenses such as tire replacement and fleet maintenance, fuel expenses, as well as insurance premiums and payroll, sometimes a company’s working cash reserves can be depleted — and selling your invoices at a discount to a reputable factoring company helps you stay on financial track. Freight factoring positions a third-party company such as Accutrac Capital to effectively take on a portion of your AR responsibilities, as they worry about collecting the invoices on your behalf. This service then frees you up as a business owner to take advantage of new opportunities for growth. And because freight factoring is not a loan, you don’t have to worry about accruing new debt on your balance sheet. Finally, a third-party factoring company can help you with unlimited credit checks on prospective customers to help you manage risk when taking on new contracts.

If you’re looking for advice on running a successful trucking company, consider factoring as a key element to your success. Freight bill factoring is particularly beneficial to small trucking companies, as they no longer have to wait for invoices to be paid before taking on additional work and the costs associated therewith. Larger trucking companies, meanwhile, use freight bill factoring to grow at a consistent pace because they know they have access to cash on hand when they needed to seize new opportunities. Small or large, your trucking business can benefit from freight factoring.