Executive Education

Transportation Factoring: A Solid Defense Against Uncertainty

Moving freight in the US is a difficult enough job without the economic uncertainty currently facing the country. With continued anxiety surrounding NAFTA, the freight truckingand transportation industriescould be looking at significant changes over the next two years. Importing and exporting are the lifeblood of the freight business, and the US trades $577 billion with Canada and $532 billion withMexico — numbers not to be undervalued.

With prolonged NAFTA uncertainty, many trucking companies could be looking to tighten their belts, or at the very least re-evaluate their financial security. As NAFTA renegotiations continue to hit dead ends, fleet owners need a growth plan equipped to handle whatever the future of the US economy has in store.

Over the last decade, a number of US trucking companies have been incorporating transportation factoring or a trucking factoring service into their financial strategy to help mitigate the risks associated with the industry. Trucking fleets small to large use transportation factoring as a reliable way to inject cash flow.

Rather than waiting up to 90 days for slow paying-customers to pay their invoices, transportation factoring gives owners the money they need when they need it. In order to stimulate growth, new opportunities must be seized when they present themselves. But if an owner is stuck waiting months for money they’ve already earned, they may not be able to seize such an opportunity. This is where transportation factoring helps.

The benefits are myriad, from upfront cash to AR support as well as back office assistance and risk mitigation through unlimited credit checks on current and prospective customers.

Transportation factoring provides financial solutions to:

  • High growth companies with insufficient working capital on hand
  • Start-upoperations
  • Businesses in transition
  • Businesses experiencing a tough year or experiencing a change of ownership
  • Companies unable to acquire the funds they need from traditional lenders

Because transportation factoring isn’t a loan, you can apply for it without needing to worry that you have insufficient collateral or less-than-stellar credit. Because trucking companies are approved in part based on the credit worthiness of their customers, trucking companies of all sizes and at all stages of growth can rely on quick approval. As long as your customers have a solid payment record, you are well on your way to securing funding.

A factoring company such as Accutrac Capital— one that specializes in the trucking industry and works only with trucking companies — will buy your invoices from you upfront at a discount, providing you with same-day remuneration through one of several funding plans. The most popular plan is flat fee factoring that starts at 1.59% of the invoice. If you operate a larger fleet, a factoring line of credit starts at as little as 0.022%. If you have customers that routinely pay quickly, flex factoring costs as little as 0.49% for invoices that are turned around within 10 days.

The leverage afforded by transportation factoring grants you access to immediate cash flow — regardless of the ups and downs of the national economy. Transportation factoring is fast becoming a mainstream financial option for trucking companies of any size.

If you feel that transportation factoring would work for your company, you owe it to yourself to get in touch with a factoring company to explore your options. If you’re looking for a reliable source of funding during lean months, or you want to cover the costs of your business expansion without relying on a loan, transportation factoring can help you take your company to the next tier.

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Mindy Wright

Mindy Wright

Deputy Commissioning Editor
Mindy Wright is CEOWORLD magazine's Deputy Commissioning Editor, and leads global newsroom coverage and management. She oversees and coordinates coverage of the news and ideas in partnership with writers across the continent. She has reported from more than 15 countries across Asia, Europe, Africa and the Americas. She has advised CEOs, investors, boards, and high-profile industry leaders on a wide range of issues impacting the global business landscape. She can be reached on email mindy-wright@ceoworld.biz. You can follow her on Twitter at @ceoworld.