An Invoice Factoring Guide
Once you know how to start a trucking company and you’re out on the road, it’s important to make sure you can afford to maintain your truck as well as your business. Since cash flow is critical to trucking companies, this guide to invoice factoring will help you stay on track.
What is Invoice Factoring?
Understanding common factoring terms is essential for trucking companies looking to maximize the benefits of invoice factoring, so let’s start by covering what factoring is. Invoice factoring is a financial solution that allows trucking companies to access and receive immediate cash from unpaid invoices. With cash in hand, companies are then able to pay for materials, equipment, payroll, and overhead costs. While there are other traditional loans out there, invoice factoring is quickly becoming the fastest and most secure funding method for trucking companies.
The Process of Invoice Factoring
The first step to trucking freight factoring is easy. In fact, you’re probably already doing it – delivering your loads as you normally would. After that, all you need to do is submit a copy of your invoice to an invoice factoring company or, if you work with Integrity Factoring, we’ll take care of the prep for you. Once received, the invoice is verified. The factoring company works with your customers to collect payment. You will then receive money (typically the same day) after an invoice has been verified. Finally, once the invoice is paid by your customer, the reserve is released minus your factoring fee.
The Benefits Of Invoice Factoring
What makes invoice factoring appealing is its many advantages over traditional loans and financial solutions. As outlined in our freight factoring guide, there are many benefits of factoring. We’ll explore a few below.
Easier Financing
Traditional bank loans and other long-term financing options are often hard to get. If you don’t have good credit, invoice factoring might be the best option for you. Simply put, your customers pay an invoice factoring company instead of you so their credit is typically more relevant than yours.
Fast Cash Flow
It’s no secret that carriers need to be paid and they need to be paid what their customers owe them. Unfortunately, however, this can take between 30 and 90 days. Invoice factoring provides trucking companies with the cash they need the same day without any waiting period.
You’ll Have the Money You Need
When you own a trucking company, you know it’s more difficult to take on jobs if cash flow is tight. Invoice factoring, however, alleviates this issue. You’ll have the money you need, making it easier to meet growing demand, hire new drivers, and pay for day-to-day expenses.
No Debt to Repay
Invoice factoring helps you avoid going into debt. Since it’s not a loan, there’s no expectation to pay anything back. Furthermore, there are no hidden fees or interest. Instead, it’s just a small, one-time payment taken from your paid invoice.
Why You Should Use Invoice Factoring
Whether you’re exploring freight factoring for owner-operators or have a fleet, factoring:
- Provides immediate cash flow.
- Requires no credit.
- Saves time and money on collections.
- Provides flexible contract terms.
Every business owner knows there are going to be fluctuations in business. That’s why it’s important to be prepared with the right financial solution when you need it. Trucking companies can use invoice factoring so they won’t be stuck on the road when they need cash the most. Don’t miss out on growing your business.
Get Started with Integrity Factoring
When it comes to invoice factoring companies, Integrity Factoring stands out from the rest. Whether you’re just getting started or switching factoring companies, we’re dedicated to supporting your unique needs with fast, flexible funding. If you want steady cash flow to help your trucking company grow, contact us today.
