Factoring Opportunities for Transportation Industries

A large portion of operating costs for companies that transport people, materials, inventory, other vehicles, and oil, among other items depend on circumstances beyond control. The economy, the price of gasoline, and weather are just a few examples. Combine those factors with waiting thirty to ninety days for customers to pay the invoice and cash flow can get low fast.

Implications of Cash Flow Problems

Company owners may end up short of cash to meet payroll. They may be late paying the business utility bills. Purchasing the gas for the next long haul can also become an issue when cash is low. There are a few avenues available to owners to increase cash flow problems.



Solutions

A bank loan is a traditional avenue for keeping the company operating. There will be interest rates to pay, another payment to fit into the budget, and the risk of denial. The application process is drawn out and the bank will consider the credit history and financial security of the business. This route may be a solution for expanding the business at a later date, but will not help meet payroll at the end of the week.

Speaking to creditors and arranging a payment plan for outstanding balances will help with that situation. That still leaves payroll and operational expenses associated with being on the road. The electric company may be willing to wait for their money, but the fuel companies will not deliver gas without payment.

Factoring

A quick and convenient solution is freight bill factoring. There are no costs upfront. The application is short and can be completed directly online. Approval rates are high and decisions can be made as fast as the same day.

Financial information for the business is not required and the credit history is not a consideration. It is the credit history of customers that determines the approval and the percentage of payment on the bill. A factoring company, such as Business Factors, buys the freight invoices from the business for a percentage of the face value. The percentage rate falls between eighty and ninety-six percent.

That cash is given to the business owner in a matter of one or two business days. Payroll can be met, gas can be purchased, and operational costs will be covered. The factoring company collects one-hundred percent of the invoice from the customer. Fees, typically two to five percent, are taken out of that money.

 

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