Trucking companies are a very good example of a type of business that can thrive by choosing a top factoring company for trucking services. As these businesses are typically B2B (business to business) they invoice for their services, often having at least a 30-day period between invoicing and expecting payment.
In the meantime, those trucks have to stay on the road, insurance and maintenance has to be paid, fuel bills mount up and drivers need payroll. To address this gap and provide a steady flow of cash for expenses, a factoring company for trucking companies becomes a very viable option.
How It Works
When you invoice your customer for trucking services, you know you’re going to have to wait for payment based on the terms of the invoice. While most invoices will be 30 days, some may be 60 or 90. Instead of waiting, you can sell those accounts receivables to a factor for up to 80% of the value.
The factor then takes over the accounts receivables. When the customer pays the factor in full, the factor deducts the fees for the service from the 20% they have held back, providing you any balance remaining.
Look for Industry Expertise
Trucking companies are different from other types of businesses. By working with a factoring company for trucking companies, you will get a better rate on factoring as the company is comfortable with the business model used in the industry. They also will have experience in working with many of your customers and can easily assess the risk of taking on the accounts receivable, something that factors without this experience will find challenging.
Look for a factor that is willing to work with the volume of invoices you want to sell. Some companies have a minimum volume requirement which can result in penalties if you don’t meet that number. With the natural ups and downs in this industry, avoiding these types of minimum volume requirements will be cost saving for your business.
