How Factoring Helps Carriers Avoid Cash Flow Freezes

The benefits of transportation factoring


2018 has turned out to be a year fraught with financial uncertainties thus far across a number of sectors in the US. With regulatory measures in flux, and free trade negotiations functioning chaotically at best, many industries (especially the trucking and transportation industry) are looking for increased sustainability.

In 2018’s uncertain economy, transportation factoring is fast becoming a popular and mainstream method of securing funds reliably, conveniently, and most importantly – quickly. Invoice factoring has long been implemented in industries such as staffing, wholesale, IT, and business services, but it remains such a popular financial strategy in trucking and transportation because it provides a way for carriers to quickly collect on services rendered and to keep themselves in the black while they wait for large invoices to clear.

For those unfamiliar with the term, transportation factoring (also known as freight bill factoring) is a type of accounts receivable financing that allows carriers to sell outstanding invoices at a discount. Instead of waiting up to 90 days for customers to turn over payment, many trucking companies are choosing to partner with a third-party factor that then buys those invoices upfront. After charging a small factoring fee (and keeping 3% of the invoice value in reserve until the bill is collected), the factor provides a cash advance to the carrier worth upwards of 97% of the value of the invoice sold.

One of the considerable advantages of transportation factoring is that you can often receive your advance the same day you submit the invoice. This type of quick turnaround time allows trucking businesses of all shapes and sizes to keep positive cash flow and seize immediate growth opportunities. High approval rates mean that carriers often qualify even if they don’t have the best credit. Some freight bill factoring companies also offer:

  • the ability to identify the credit worthiness of present or potential customers
  • sizeable fuel discounts across North America
  • generous credit terms on accrued fuel expenses
  • Accutrac Capital – provides you the peace of mind necessary to focus on other areas of your business. The major advantage of working with a factor who intimately understands your industry is that you never have to explain your business. The right factoring partner knows the ins and outs of the industry and will offer you:
  • access to same-day funding
  • easy to calculate factoring fees
  • a simple document submission system
  • 24/7 access to your account information online
  • Many also offer unlimited free credit checks on potential and pre-existing customers. When you are able to determine a customer’s ability to pay before you commit to making the haul, you are better able to minimize risk and ensure financial stability.

    Increasing cash flow is important in any sector, but in the trucking and transportation industry, a sudden lack of cash on hand can be the difference between solvency and insolvency. Owners must constantly have the funds available for fleet management, daily equipment and truck repairs, employee benefits and wages, as well as other overhead costs. Transportation factoring allows for flexible, immediate funding options to help keep your fleet on the road and your business growing.


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