When looking to start a trucking business, it’s crucial to have a strong cash flow. However, financing can be difficult for new small business owners to obtain due to the requirements of a traditional loan: number of years in business, strong credit history, etc. This is why many business owners, specifically those in the trucking industry, seek the help of a factoring company.
Invoice factoring is an ideal financing option for small trucking businesses because, unlike traditional bank loans, factoring companies don’t take months to fund your business. They can get you started right away to give you fast access to cash when you need it.
Benefits of a Factoring Company for Trucking Businesses
How can invoice factoring help your trucking business succeed? Here are five benefits to note:
1. Works Well with New Businesses
Running a trucking business requires cash on hand to pay for fuel, vehicle maintenance and other daily operating expenses. Startup companies may struggle to secure a bank loan, especially those with a poor credit history. Invoice factoring helps small businesses secure funding by having their invoices paid in advance. It’s technically not a loan, but an advance against your account receivables.
2. Keeping Track of Invoices
Keeping track of invoices and collecting payments can be a hassle, but with invoice factoring, the factoring companies do this work for you. You can receive the worth of your invoice up front while the factoring company makes sure your client pays. It’s both convenient and efficient, saving you valuable time that can be better put toward running your business.
3. Fund Business Expansions
You have succeeded in starting your trucking business and now you’re looking to expand. Growth requires resources. You’ll need money to hire more workers, expand your space, and pay for gas, rigs, and repairs. Invoice factoring makes this possible by helping to bridge the gap between accounts payable and accounts receivable.
4. Avoid Debt
Invoice factoring allows you to grow your business without borrowing money. You’re simply getting paid in advance for the work you’ve already done (minus a small fee). Once you receive the funds, you don’t owe the lender anything.
5. Flexible Contract Terms
Invoice factoring companies offer the flexibility you look for in a lender: no long-term contracts and no limit to the number of unpaid invoices you can submit. Once you qualify, you’re free to submit as often as you’d like.