In today’s troubled economy, many businesses are pressed financially, and as a result often things that would normally be attended to are not. For example, retail stores with a limited cash flow elect to cut back on advertising and manufacturers in the same bind scrap their plans to improve their products. Though these reactions are certainly understandable, in both cases it is clear that they actually hurt the companies. After all, how do you bring new customers to the door if you do not advertise, and how do you beat the competition if you do not improve the product you manufacturer. You need freight factoring.
This is as true of trucking companies as it is for small retail stores and manufacturers. When cash flow sinks, trucking companies sometimes fail to obtain needed maintenance on their vehicles, staff is cut back, and bids are not made on jobs where there is a concern that the trucks are not in sufficient condition to take on the task. Indeed, it isn’t uncommon for trucking companies to lose work simply out of a lack of funds to pay fuel costs. And these are just a few of the areas that are affected. However, freight factoring companies can supply the relief needed by trucking companies that are in this situation.
The easiest way to explain freight factoring is to compare it to other forms of financing. Traditionally companies needing money to operate go through the process of applying for a bank loan. Of course, while some applications are accepted, others are not, and it isn’t uncommon to wait weeks for the bank’s decision. Aside from that, companies that borrow from a bank sign a repayment contract that adds interest to the amount borrowed.
Unlike bank loans, with a freight factoring company, the trucking company essentially sells its invoices to the freight factor at a discounted price. Because the factor obtains payment from the trucking company’s customer, the trucking company’s credit does not go through the strenuous review process that a bank officer puts it through. The factor will review the credit history of the trucking company’s customer, but that is typically done online and takes minimal time.
One of the biggest advantages with our team at Pay4Freight is that a decision is made quickly. Approvals allow the trucking company to obtain cash ASAP, through direct deposit, express codes checks, free fuel card uploads, and other means.
All said trucking companies that are experiencing a reduced cash flow should consider the benefits that a freight factoring company will give them.