Owning a trucking company means having to deal with unique challenges, from recruiting qualified drivers to keeping track of changing regulations. Managing cash flow is a challenge that can make or break your trucking business.
Dealing with customers slow to pay for your services is a common problem for many small to medium-sized trucking companies. Customers may take 60 to 90 days or longer to pay their bills. As an owner you have a payroll to meet, fuel and insurance costs, and equipment to maintain and repair. This expense becomes your company’s responsibility.
You may want to consider the services of a factoring company that specializes in invoice management to handle your company’s cash flow and accounts receivable collection problems. The benefits to your company will make the decision to look into the services of trucking factoring companies in Madison, WI, profitable in the long run.
What Factoring Does
A factoring company buys your trucking firm’s unpaid invoices or accounts receivable. Acting as the outsourced agent, the factoring company, for a fee, assumes the duties of issuing, collecting and processing payment on the invoices. It also assumes the risk if the load is not paid. The cash for the invoices is made promptly available to your company’s account, in many cases on the same day.
There are advantages to factoring your invoices for quick cash flow as opposed to taking out a short-term business loan to pay your recurring expenses. Repayment of the loan takes money that is better spent on the business. The cash available from factoring your invoices can be reinvested after company-related expenses are paid.
The Benefits
Factoring provides reliable and consistent cash flow that is key to operating a trucking business. Factoring can be a source of funding as long as there are customers that need freight hauled and invoices and bills to process.
This means the operation of your trucking business does not grind to a halt while you wait weeks or months to get paid. Your company has the funds to meet immediate payroll, handle insurance and tax requirements, perform fleet maintenance, purchase inventory, and for other related expenses.
The Bottom Line
Because the trucking factoring company is managing the invoices and accounts receivable, you have the time as an owner to concentrate on operating the fleet. Your company’s success is built on ensuring that more deliveries are made and that they are made safely and on time. There is also more time to concentrate fully on long-term strategies for your company’s growth and profitability.
Factoring can be an efficient invoice management option for your company. It is an option that is not for every owner, so you will want to discuss specifics with a financial specialist of one of the trucking factoring companies in Madison, WI, to determine if factoring is a solution for you and your business.