How to Keep Your Trucks Moving During a Financial Slowdown

Financial slowdowns are difficult for businesses, particularly when they lessen working capital. They’re especially trying if you own a trucking fleet because of the expenses involved. How do you balance the rising cost of gas, insurance, licenses, truck maintenance and other transportation costs without resorting to lay-offs or fuel surcharges—solutions that could potentially cost you customers and reduce profits.

One solution is trucking factoring, an incredibly simple process with the right transportation factoring service.

What is freight factoring?

Freight factoring services, such as Far West Capital, pay cash immediately to trucking companies for a percentage of their invoices today. Factoring services can help increase your company’s cash flow by reducing the lag time between invoicing and payment from your clients.

How does transportation factoring work?

Transportation factoring consists of converting a company’s accounts receivable into working capital by selling invoices to a factoring company at a discount just like any invoice factoring. Getting business loans can be tricky and time consuming. Transportation factoring can help you during an economic downturn by providing funds you need to focus on your clients and trucks without having to worry about paying your bills on time if a customer is late on a payment.

Transportation factoring reduces credit risk to your company and can help solve any cash flow problems your business may have. And, better yet, because transportation factoring services rely on being paid by your customers, your own financial history does not have any bearing on your qualification.

The following are steps in a typical transportation factoring process:

1. The factoring company assesses the invoices and provides a line of working capital based on a percentage of the invoice, typically 65 to 95 percent of the invoice amount.

2. Your customer then pays the factoring company.

3. Upon payment of the invoice, the transportation factoring company will release the difference between the collected amount and the advance minus their factoring fee, which typically range anywhere from 1.5 to 5 percent.

The size of your advance depends on the projected dollar volume “going through” your program, the turn of your historical and projected receivables, the number of customers, average invoice size and the financial profile of your company. Transportation factoring companies like Far West Capital will work with you to build customized factoring and financing solutions around trucking and transportation businesses.

With Far West Capital’s truck factoring services, you can get advances up to 97 percent of eligible accounts receivable, and line amounts are available from $30,000 to $5,000,000, enough capital to get you through any financial slowdown. Far West Capital also offers invoice factoring solutions for other industries. For more information on invoice, accounts receivable and transportation factoring, visit www.farwestcap.com or call 512/527-1100.