Trucking is a huge business that can provide you with financial freedom. But it can also demand a high capital. Further, seasonal fluctuations can affect sales. In turn, you will have lean months. Trucks also need maintenance and repairs, which can be costly. In other words, there may be times when money is tight – you need extra cash. If you want a quick and easy financing option, look for a factoring company for trucking.
What a Factory Company for Trucking Do
Although factoring is still financing, it is nowhere unlike regular business and payday loans. Here are some of its advantages:
1. Quick and Hassle-Free Application
Factoring has fewer requirements than banks and other lenders. In fact, it doesn’t rely on your credit history. Rather, it depends on your invoices.
In factoring, you get cash in exchange for your accounts receivables. These are your collectibles from customers. After giving your receivables, the lender will offer at least 70 percent of the invoice value. You will receive the remaining 30 percent after your customers have paid. The final amount is less since the company already charges the factoring fee.
It takes as fast as 24 hours from the moment you process your application, and the approval rate is very high.
Not all factoring companies are non-recourse, but if you like extra protection, look for one. Non-recourse means the company absorbs your losses for non-paid invoices. Of course, this is a premium service, so the charges are higher. For a business that cannot handle any more losses, this is worth it.
3. No Debt
This may be a financing option, but you don’t create debt. Consider it as transforming those invoices into cash. In the end, the company gets its fee – that’s it! You don’t have to make any monthly payments. You also don’t have to pay any interest. In fact, in many cases, the factoring fee is significantly lower than business loan interest, so you are actually saving money.
4. Lower Minimums
Many companies have minimums. This refers to the lowest value of the invoice. It can be worth $100,000 or more, which may not be achievable by small or startup trucking businesses. But you can also search for a factoring company for trucking that doesn’t have one.
5. Instant Cash Flow
Nothing is worse than having to look for extra cash to finance repairs, temporary staff, and other sudden expenses. Dipping your hand on your existing money may not be wise when it is already meant for something else such as promotions. To save yourself from the frustration of planning a tight budget, go for factoring.
Factoring for your trucking business isn’t for everyone. It also has its limitations. But it remains to be an effective, fast, and easy solution if you’re looking for money right away. You can now avoid dealing with so much paperwork. Most of all, you don’t add more debt to your business. This frees up your cash flow, which you can use for future projects.
Are you looking for factoring company for trucking? Our team at FactoringCompany.net can tell you how to best turn your invoice into cash.