Trucking companies can be very profitable but demand a lot of cash. Learn how to finance your trucking company.
If you own a trucking company, you know that it can be a very profitable business. However, you also know that trucking companies are very cash hungry. You need money to pay for the equipment, to pay your drivers and for fuel. The challenge comes from the fact that freight bills can take up to 60 days to get paid. Unless you have a lot of cash in the bank, this can be a problem.
Speaking of banks, going to your banker for a business loan or line of credit will not help much either. Bankers will only lend money to companies that have a lot of assets, have been in business for three years and can provide audited financial statements. Of course, if you had lots of assets you wouldn’t need a banker.
So, what are your options?
Freight bill factoring, also known as freight factoring, can provide you with immediate financing for your slow paying freight bills. So, if you have quite a few invoices that are paying slowly, factoring can help you.
The factoring arrangement is very simple. The factoring company advances a large portion of the money owed for your freight bills the moment you invoice your customer. They wait to get paid while you get immediate use of the money.
As opposed to bank financing, freight bill factoring is easy to qualify for and available to small and large trucking companies alike. Most factoring companies have two main requirements. The first one is that you work with reliable clients and freight brokers. The second one is that your firm has at least two trucks. It’s easier than a bank, isn’t it?
If you own a trucking company that is growing, be sure to consider freight factoring.
