2017 is expected to be a positive period of economic growth. This year, the long awaited start to freight capacity contraction is expected to take hold in the third and fourth quarters. This signals the return to higher demand in the freight transportation industry and a need for carriers to plan ahead for growth.
A Good Year Ahead for Trucking
US economic experts are anticipating a GDP growth rate between 2 percent to 3 percent, the ideal range of expansion to manage a healthy balance between
output, employment and inflation. The boost in 2017 comes as the main drivers of growth shift from consumer spending to a mix including manufacturing,
capital expenditures and government spending. The big news for freight carriers; manufacturing is forecasted to increase faster than the general economy.
The momentum that started in late 2016 will continue into this year, strengthening the supply chain network. The fiscal policies likely to be enacted over the first half of 2017 by the Trump administration, will further stimulate economic growth. Industry analysts predict the long awaited capacity crunch to finally arrive in the latter half of 2017 as manufacturing increases and regulatory issues such as the ELD mandate are implemented.
This of course is assuming the economy performs as expected. Some economists warn of risk to the US economy as Mr. Trump’s initiatives could damage trade relations and hinder consumer spending. Some even warn that the impact of the new government’s stimulus policies could over heat GDP growth. If this happens, it may lead to a surge in confidence and increased activity. The potential threat is a tightening of resources and increased labor costs that ultimately lead to higher inflation rates. Over confidence, overspending and over borrowing naturally accelerate the economic cycle speeding up recession that my hit sooner rather than later.
Plan for Growth
For trucking companies, this uncertain path of economic expansion creates an extremely difficult business environment to navigate. With the promise of
increased demand on capacity looming just ahead, how do the owners and fleet manages of trucking companies plan for growth?
The limited funding options available to trucking companies to support growth is one of the industry’s biggest obstacles to sustained profitability. The
commercial banking system is inherently risk adverse. Before a bank will lend you money it needs to be satisfied that your business is not in danger
of becoming a credit risk and can sustain operations as it manages the debt payment. Normally, banks consider trucking businesses to be high risk.
Without solid collateral and a strong credit history to mitigate the bank’s concerns, most start-up companies, small and mid-size carriers fail to
meet the stringent qualification demands needed to secure an operating business loan.
Invoice factoring is the ideal solution for freight carriers facing this difficult obstacle. Factoring is not a loan, it is the selling of invoice receivables
at a discount in exchange for immediate cash. Your trucking company’s most valuable financial assets are the invoices that are issued to your customers
upon delivery of each load. Normally, customers take 30, 60 or even 90 days to pay; this creates a tremendous stress on your cash flow, restricting
access to the working capital you need to keep your trucks moving. A growing number of trucking companies are turning to the distinct advantages of
freight factoring (a specific form of invoice factoring) to solve this
How Freight Factoring Works
Freight factoring is a funding solution provided by invoice factoring companies that specialize in the transportation industry. A reputable industry specific
invoice factoring company, such as Accutrac Capital, fully understands how your business works and knows the daily operational and fiscal challenges
you face every day. The features and benefits of freight factoring are designed specifically to meet the grueling demands of hard working trucking
companies. Here’s how it works:
- Your trucking company delivers a load
- You send an invoice to your customer and a copy invoice to your factoring company along with supporting documentation.
- A cash advance of up to 97% (minus a small fee) is sent directly into your account within 24 hours (usually it is within the same day).
- When your customer pays the full amount, the factoring company reimburses you the balance of 3% owing.
Qualification is simple: if your tucking company has credit worthy customers, you will be qualified quickly and easily.
No limit funding: the more invoices you generate to credit worthy customers, the more access to working capital you have.
The process is simple: electronic file transfer (such as emailing invoices and documents) is the fastest and most convenient means available
to ensure the quickest access to same day funding.
Other benefits of using a factoring company to improve your cash flow issues are the additional support services of free A/R management and access to credit
search tools to mitigate risk.
For more information about the positive benefits of invoice factoring to improve your trucking company’s access to working capital; visit www.accutraccapital.com or call: 1-855-838-7575