Immediate Access to Working Capital
Factoring companies provide a vital element of certainty to owners of trucking companies pursuing financial stability in these uncertain times. By utilizing the inherent benefits of invoice factoring, owners gain immediate access to working capital, a critical necessity in this capital intense industry.
Transportation affects economic conditions, and economic conditions influence transportation. This inter-relationship shifts with changes in technology,
economic development, political factors, and many other influences. For company owners, it is very much a “be prepared for anything scenario” as the
economy continues to defy predictions.
The Election had Dramatic Effects
The recent election of Donald Trump on November 8th, has had a direct and dramatic effect on markets adding to current economic confusion. US markets took
an immediate nose dive the night of the election, but recovered before morning markets opened the next day. The unexpected victory sent shock waves
through global markets, but they too recovered following the conciliatory comments in the President Elect’s acceptance speech.
The market is reacting very favorably to Trump's win, combined with the Republican control of both the Senate and the House of Representatives. It is anticipated that this should lead to the enactment of many of Trump's market-friendly policies.
An Uncertain Future
In spite of the current market trends, experts warn that the US and global economies will face a very uncertain future. Despite one the longest growth
periods in US history, the past seven years of expansion has been the most sluggish since World War II. Following the elections, economists are divided.
Some predict the US economy will continue to grow, but at rates below historical averages. Some are anticipating a surge fueled by Trump’s initiatives.
Other economists warn of risk to the U.S. economy, as Mr. Trump’s policies could hurt trade and hinder consumer spending. Some even forecast a recession.
What comes next, no one can be even remotely sure. This is what we do know; according to a report released by the US Commerce Department in October, the
US economy expanded at a rate of 2.9 percent from July through September. This represents a significant improvement from the first half of 2016 and
the best quarterly advance in two years. Yet the transportation industry’s long awaited capacity crunch is yet to be realized. Shippers and logistics
operators are expecting some contraction, anticipating a 100 percent capacity utilization sometime in the second half of 2017, perhaps even earlier.
Analysts predict the crunch to finally arrive in late 2017 or 2018 following implementation of the ELD mandate and other regulatory issues. This of
course is assuming the economy doesn’t slow down and the incoming Trump administration doesn’t delay the mandatory use of ELD.
Maintaining a Sustainable Trucking Company
With all this economic uncertainty, how do owners maintain a sustainable trucking company? The key is good service, access to working capital and be prepared for future opportunities.
Shippers have become wary of low cost transportation service providers that intermittently lead to service failures. Delayed deliveries and damaged freight
are costly failures that erode the shipper’s bottom line. By delivering consistently reliable service in specifically chosen lanes, successful carriers
build customer loyalty and command profitable rates for their service.
To assure the continued operation of your company’s working equipment, you need access to working capital. Without the needed cash on hand, your trucks
will grind to a halt, eliminating your source of revenue. Maintaining cash flow is absolutely essential to the survival of your business. Further,
it is vital to secure financing for future growth. When the capacity crunch hits, will your company have the financial resources to fund operational
expansion to meet demand, or will you watch your competitors grow as your fleet struggles to meet its current volumes?
Factoring is a Mainstream Financial Option
As the industry continues to labor through the current economic conditions awaiting the arrival of greater demand on capacity and higher rates, it is vitally important to maintain financial stability and indeed, financial readiness. The powerful leverage afforded by factoring invoice receivables to access immediate working capital is quickly becoming a mainstream financial option for trucking companies looking to strengthen cash flow and fund growth.