Common factoring mistakes trucking companies make
Factoring can be a great way for small businesses, especially trucking companies, to manage their cash flow effectively and not devote valuable time that can be better spent hauling the next load because you are chasing down a late payer.
Factoring is the process of selling accounts receivables in exchange for a small fee that is deducted by the factoring company. In exchange for the fee, which can range from about 3% of the receivable to 10% or more, the factor agrees to pay you for the invoice and then they collect on the debt. Some factors will pay you the majority of the receivable and complete the payment once the debt is collected while others will pay only a small portion until final collection is made.
The two biggest benefits of factoring for small carriers and owner-operators is that they spend less time chasing past due receivables and more time driving, and a steady stream of revenue coming into the business. There is a cost to that, of course in the form of the fee, but knowing you have income coming in on a regular basis can lift a great weight off your back.
If you think factoring is for you, there are plenty of businesses that work with trucking companies specificially, including Triumph Business Capital, which offers TriumphPay.
Article Reference:Freightwaves