The trucking industry has been utilizing methods for invoice factoring as far back as the late 1940s, post World War II.It was at this time that roads and highway systems in the west were expanding and making significant improvements. Trucking thenstarted to become a vital part of North America’s supply chain network and transportation companies enjoyed an increase in funding from both banks and independent firms that provided easy access to financial agreements.
While the industry continued to evolve through to the 1980s, the sheer volume of freight businesses grew, as did the competition. In response, freight rates and interest rates from banks went up; acquiring lines of credit to fund initiatives also became more difficult. This made it particularly challenging for start up businesses to secure the finances needed to operate. For many couriers, invoice factoring from expert trucking factoring companies became the most readily available and viable cash flow solution.
The more invoices a company issues, the more using factoring will generate flow of monies back into their business through automatic financing. Factoring is also directly linked to a company’s sales, the harder the company works, the more access they have to cash without relying on a customer’s prompt turnover of payment. This ensures start up trucking enterprises can find success simply by maintaining a strong work ethic. A factoring company then takes the responsibility for ensuring customers pay up. Furthermore, approval for transportation factoring doesn’t require a client to present their credit score, just the scores of their customers.
Factoring is popular in the freight industry also because operating costs tend to be high. In order to move supplies, companies must maintain their fleets, ensure they can pay for the fuel that powers them, and pay their employees on time. This requires high capital investments that can only be made when there is a steady and reliable cash flow solution. When in recent years, banks have become hesitant to approve transportation companies for sufficient credit, factoring provides an alternative and cost-effective strategy for financing. Because it is not a loan, the simple structure holds numerous benefits that favours business owners.
Industry specific factoring services like Accutrac Capital provide three different factoring plans that freight companies can choose from. With flat-fee factoring, clients receive 97% of the cost of their invoice within 24 hours. 3% is then held in reserve for up to 90 days, or until customers turnaround their payments. A factoring fee of 1.59% is awarded to the factoring company for their service. This entity also provides factoring lines of credit for as little as 0.022% per day, and quick solutions for companies with reliable customers, but who need cash fast.
Invoice factoring has provided the trucking industry with financial support for decades, with competitive rates, cash advances on loads, equipment financing, discount fuel programs are more. The trucking industry has been a reckoning force, and has played a part in moving the economy forward for 75 years – factoring allows companies to continue doing this important work.