As Your Business Grows
We Deliver The FUNDS
We Deliver The FUNDS
There are so many factoring companies offering financial services for trucking companies that is has made it more difficult to determine what attributes you should consider when it comes time to select a factoring company for your trucking business.
In order to determine if a factoring company is the right fit for your trucking company, we will have to look back at how the trucking industry has evolved along with the invoice factoring industry.
If you have been around the transportation and trucking industry for a while, you may recall the days when everything was done by phone, beeper and fax if you were lucky to have one. In those days there was no email, no cell phones, no GPS, no fuel cards and many other beneficial devices and services that are here today to help trucking companies succeed. All businesses expand and invest as they grow and look for more efficient methods while keeping cost down and production high.
Cash flow shortages in the trucking industry still exist today as much as it did back then. Even with all these gadgets and digital enhancing devices, freight bills still get paid in a slow manner causing extreme cash flow issues for trucking companies.
Traditionally, trucking companies would receive dispatched orders via fax or phone calls from shippers. However, in today’s trucking market, it is more common for them to receive an email from a freight broker acting on behalf of a shipper or a notification from an online Trucking Load Board Service.
While loads are dispatched at a fast pace, payment of invoices has become slower compared to 10 years ago. Due to the slow payments from freight brokers and shippers, trucking companies have had to search for trucking invoice factoring companies that specialize in funding invoices on credit terms. An invoice for a completed load that has been accepted by the client is an immediate business asset for the trucking company and can be used as collateral for funding. Typically, the factoring company provides funding by purchasing the invoice from the trucking company at a discount, which averages between 1.5% and 3%, depending on sales volume and the advance rate.
Before the digital age gained popularity in the trucking and factoring industry, the funding process was slow and involved extensive paperwork, mailing, and phone call verifications. Trucking companies were required to submit ORIGINAL paperwork for load transactions, which was time-consuming and costly for both trucking and factoring companies. Surprisingly, there are still some factoring and trucking companies that continue to operate with outdated methods. Many trucking companies remain unaware of the options now available to them, while some factoring companies resist change, lack the financial resources to invest in digital solutions, and refuse to evolve.
Comparison of the process for load factoring in the past and now present:
.jpeg)
It is important to choose a factoring company that specializes in the trucking industry and that is shows continuing effort in keeping up to date in technology in order to help their clients.
A factoring company specializing in the trucking industry differs from general factoring companies in several ways:
The best factoring companies understand the unique challenges faced by trucking businesses and offer specialized services to meet those needs. One of the most valuable services they provide is non-recourse factoring. This type of factoring is particularly beneficial for trucking companies, as it allows them to sell their invoices to the factoring company and receive immediate funding without being held accountable if a customer defaults due to insolvency or bankruptcy. This arrangement shifts the credit risk from the trucking company to the factoring provider, offering reassurance and financial stability in an industry where delayed payments and client defaults are common issues.
Non-recourse factoring is crucial for trucking companies because it protects them from the risk of non-payment while ensuring a steady cash flow. In the transportation industry, unexpected payment delays from shippers and freight brokers can create significant operational challenges. With non-recourse factoring, trucking companies can maintain smooth business operations without the constant concern of bad debt affecting their bottom line. This security allows them to focus on their core activities, such as managing deliveries and expanding their business, rather than worrying about collecting unpaid invoices.
When evaluating factoring companies, it is essential to choose one that offers comprehensive non-recourse factoring options tailored to the trucking sector. The best providers have deep industry knowledge and can offer flexible terms, competitive rates, and additional benefits like fuel advances and fuel discount programs. These perks help trucking businesses enhance their cash flow and reduce operational expenses.
At 1st Commercial Credit, we recognize the importance of reliable cash flow for trucking companies and proudly offer non-recourse factoring services. Our expertise in the transportation industry allows us to provide tailored solutions that mitigate financial risks while supporting our clients' growth and stability. By partnering with us, trucking companies can confidently manage their finances, knowing they are safeguarded against client insolvency and protected from the financial burden of unpaid invoices. With over 20 years of experience in finance and factoring services, 1st Commercial Credit stands as a trusted partner committed to helping trucking businesses thrive.
Fuel and tire discount, low rates, free online credit check, we got it all covered! We specialize in trucking factoring and can give your business the working capital it needs.
.png)
.png "Read More About Factoring Staffing Agencies")
.jpg "Read More About Factoring Freight Trucking Companies")
.jpg "Read More About Factoring Staffing Agencies")
.jpg "Read More About Factoring Staffing Agencies")
.jpg "Read More About Factoring Freight Trucking Companies")
