Have you considered load advances or invoice factoring (receivable financing | invoice discounting)? The loss of a major contract. A rough economic climate. A spike in operating costs. These are all factors that can lead a trucking company into a tough financial year. As you work to rebound from it, the strain on cash flow can cause some sleepless nights for any owner in the transportation business.
Often, you'll need to acquire financing to see you through until you can get your books looking healthy again. Unfortunately, this tends to be the time when traditional lenders, like banks, don't want to know you. When a less than desirable balance sheet means that bankers won't return your calls, consider these alternative forms of financing to create your much-needed cash flow. Consider a Load Advance and Invoice Factoring (also known as Invoice Discounting).
A Trucking Load Advance to help you accept more orders
It's a Catch-22 problem. You need more orders to build your trucking business revenues back up to where they need to be. But you haven't got the cash flow to cover the costs of delivering on those orders. Expenses like fuel, permits and payroll need to be paid now, not when your customer gets around to paying you.
A trucking Load Advance is an alternative form of financing offered by factoring companies. It provides you with up to 50% of the value of your load contract before you deliver it. Even though you don't qualify for financing from your bank, you can still qualify for a Load Advance. That's because qualification is based on the creditworthiness of your customers, not your business's credit rating or financial history. And because the advance is paid quickly, you have the working capital you need to accept more orders and deliver more loads.
Factoring your freight bills to create accessible cash
When waiting 30, 60 or even 90 days to be paid just won't cut it, consider factoring your freight bills and accounts receivable invoices to create ongoing, accessible cash.
What is factoring? Factoring is selling your accounts receivable invoices to a factoring company at a discount in exchange for immediate cash. And, like a Load Advance, you can qualify for factoring even if you don't qualify for traditional financingÉbecause it's based on the creditworthiness of your customers. You get your funds advanced usually within 24 hours of issuing an invoice. Then the factoring company waits to be paid. In the meantime, you have the cash flow you need to keep your trucks on the road and to build your company back up to its profitable self.
Initially, it takes about two weeks to set up an agreement with a factoring company. Then, you have access to ready cash every time you issue an invoice to a creditworthy customer.
If you're looking for ways to even out cash flow so that it's dependable and easily accessible, ask a factoring company about combining a Load Advance with factoring the balance of the load's contract value.