When trucking companies face that gap between delivering loads and getting paid for them, covering expenses and planning for the future get tricky. While motor carriers are waiting 30, 45, or even 60 days or more for customers to pay for loads, their own bills still need to be covered. Payroll, fuel bills, equipment leases or loan payment, insurance, taxes: these obligations can’t wait.
That’s where freight bill factoring comes in. It’s a tried-and-true method of bridging that payment gap without incurring debt or missing a beat in your operations.
Let’s take a look at a typical motor carrier, Mustang Freight. The owner, Paul, is one of the company’s three drivers; they lease three tractors and dry van trailers. After a slow start, the last year or so has been busy, thanks in part to today’s growing shortage of qualified drivers entering the industry. Mustang Freight was so busy that Paul was at the point where he was turning away more than a few loads due to his trucks’ tight schedules.
He had tried working with a few independent owner/operators to help meet the demand, but he saw that his profit margins would grow more if he could add another truck to Mustang’s fleet. Purchasing new equipment would mean more financial investment and the need for more working capital.
His shippers had typical 30-day terms and his primary broker charged quite a bit for quick pay. He couldn’t renegotiate the shippers’ payment terms and he debated whether it was worth the broker’s higher fees to get paid faster than 30 days. The gap between paying his bills and getting paid for loads was hurting his opportunities for growth.
Paul called Interstate Capital and signed on to receive 100% advances upon delivery. His Interstate Capital account manager walked him through using the client website to track payments coming in and using Interstate Capital’s mobile app to upload paperwork. He got him set up with fuel discount cards, fuel advance options, and direct deposit payments into Mustang’s checking account.
By synchronizing his income with his expenses, he was able to keep up with his bills and take on another truck payment and driver. After a few months, Paul was able to reduce his own driving to take the lead in improving Mustang Freight’s efficiency with better lanes and fewer empty miles. He began working with an additional broker to keep the trucks on the road and increase his revenues.
Interstate Capital works with hundreds of motor carriers, new and old, to help them maintain and grow their businesses. If you’re missing out on opportunities and the chance to expand due to a lack of working capital, invoice factoring could be the answer. Contact the friendly staff at Interstate Capital today to learn more today.