Growing a business of any type is tough, with the transportation business being no exception. Because of the huge capital involved in purchasing vehicles and maintaining them, fleet owners and owner-operators often need outside funding. However, many do not want to go into debt to expand their company. One way to avoid taking out large business loans is to consider factoring.
Most shippers and brokers pay their freight bills in 30 to 60 days, which means an owner operator must fund their operating expenses while waiting for up to two months for payment. Running a trucking business is not a cheap undertaking – in addition to paying salaries, fleet owners must budget for equipment, fuel, emergency repair, insurance and maintenance costs, all of which can add up rather quickly. Missing payments does not bode well for a small business, so waiting long periods for invoices to be paid is not really an option.
The good news is that you can fix your cash flow problems by using freight bill factoring. A factoring company will pay an owner-operator or trucking business owner an advance on their invoices, usually in the range of 80 to 90% of the invoice value. Once the shipper settles the bill with the factoring company, the remainder of the invoice will be paid to the owner-operator, less the factoring fee.
Some transportation factoring companies offer fuel advances, which can be a very useful resource for carriers just starting out or wanting to grow quickly. A fuel advance – provided by the factoring company to the owner-operator or trucking business owner as soon as a load has been picked up — provides the funds to cover fuel costs and other business expenses related to delivering the load to its destination.
Fuel advances can be very beneficial to fleet owners, since it allows them to continue delivering loads between payments, which eases cash flow concerns. Some factoring companies offer discount fuel cards that can provide substantial savings on fuel.
Another big advantage of factoring is that the factoring company will take over the administrative side of collecting payments from customers, leaving you that time to focus your energy and attention on running your business.
Interstate Capital offers factoring services tailored for the freight industry
With over 20 years of factoring experience, Interstate Capital will not only buy your freight invoices, they can also offer your company fuel advances of up to 50% per load. The Interstate Capital fuel discount card can save you up to $0.10 per gallon.
One of the biggest advantages of factoring with a company like Interstate Capital is the quick turnaround time. You can get an online factoring rate quote within minutes and once accepted, you can be set up and funded within 3 days. Try getting that kind of service from a bank! Free up your working capital and protect your credit ratings by financing with a factoring company like Interstate Capital. Contact them for a free factoring rate quote right now.