Why choose freight factoring as a financial solution for your trucking business? The benefits of freight factoring are numerous, ranging from fast funding to increased productivity. The following outline of factoring advantages should help you understand why this service should form a central part of your business’s financial management.
Immediate Cash Flow Benefits
The primary benefit of freight factoring is that it provides immediate cash injections, helping to bolster diminishing cash flows. This is the main reason why freight companies choose factoring. How does it work?
How Factoring Provides Fast Funding
Factoring works by offering rapid funding on your payable invoices. When you factor your accounts receivable, you essentially sell your invoices to the factor. You send the invoices, and the factor then advances a percentage of their total value to you. This advance rate could be anything between 70% and 95% of the total. The most important fact is that this advance payment is made within 24 hours. That is how quickly you can fund your business through freight factoring.
Impact on Daily Operations
Since freight factoring helps to keep your business liquid, it enables you to keep your daily operations running without interruption. Factoring thus helps to ensure smooth, efficient operations.
Operational Efficiency and Reduced Admin Burden
Aside from fast cash injections, factoring also provides administrative assistance to freight companies. This is much needed, especially for smaller companies that have limited resources to allocate to collection and administration.
Simplifying Collections and Payment Management
When a factor takes on your invoices, it also assumes the responsibility of collecting payment from your customers. You can therefore allocate your resources to your main operations, without having to worry about chasing payments. This helps to boost your business’s operational efficiency.
Allowing Focus on Core Business Activities
By giving you the opportunity to move resources away from collections and other administrative tasks, factoring also enables you to bolster your operational resources and keep your focus on your primary business activities, namely securing customers and delivering loads.
Additional Perks and Financial Advantages
Most factoring companies offer a number of additional advantages, including fuel advances, fuel cards and discount programs.
Fuel Advances and Discount Programs
FactorTek offers fuel advances that are streamlined and simple. All you have to do is send your bill of lading and rate confirmation, and we advance you the funds you need to pay for your fuel for the trip. You can also qualify for a FactorTek fuel card, which you can use to pay for your fleet’s refueling expenses. In addition to allowing you to purchase fuel even when your cash flow is low, these cards also enable you to enjoy a range of discounts at participating gas stations.
Enhanced Credit Risk Management in Factoring
Since factoring does not involve your credit history at all, you can use it to improve, even rehabilitate your current credit score. By choosing factoring, you are choosing not to go into debt. Over time, using factoring as your cash flow solution, rather than bank loans or credit cards, you can make dramatic improvements to your credit score.
However, that is not the only credit benefit factoring companies offer you. Factoring companies can also help run credit checks on your customers, which helps you to reduce risks of non-payment, and take on only customers who are reliable and creditworthy.
If you are ready to enjoy all the benefits of freight factoring, choose FactorTek as your partner. We are a freight factoring business based in Miami, FL. Contact us for more information on our services, or fill out our online application form.
