Please ensure Javascript is enabled for purposes of website accessibility 4 Reasons Why Trucking Companies Use Freight Bill Factoring

4 Reasons Why Trucking Companies Use Freight Bill Factoring

By October 20, 2022Trucking Information
pile of invoices

Many trucking companies use freight bill factoring to get fast access to revenue instead of waiting 30, 60, or 90 days for customers to make payments on their invoices. However, trucking companies are using freight bill factoring because of the many other benefits it offers.

1. Reducing the need for debt-based loans

When trucking companies experience cash flow issues, the typical reaction is to take out a short-term loan. Loans place debt on the books, so trucking companies need to not only maintain their regular cash flow and cover the usual overhead expenses, but they need to repay the balance of the loan as well. If cash flow issues are recurring, that could lead to an unwieldy amount of debt, making it extremely challenging for trucking companies to rightsize things. Freight bill factoring is a simple exchange of unpaid receivables for cash. No debt is placed on the books, and since factoring accelerates cash flow, trucking companies can build up capital reserves and pivot away from debt-based loans. Interest rates and loan requirements keep going up, but freight bill factoring allows trucking companies to cut the debt leash.

2. Freight bill factoring frees up accounting resources

The whole point of running a trucking company – or any business for that matter – is to provide something in exchange for money. That’s basic commerce. Since the standard business practice is for trucking companies to issue invoices with staggered payment periods of 30 days or longer, revenue does not come in all at once. This leaves trucking companies with the task of chasing down payments, sending out reminders to customers, or performing collections. Freight bill factoring from Single Point Capital eliminates all of that by converting invoices to cash within a single day. Factoring frees up resources so the accounting department can make more accurate budgets and forecasts so trucking companies can make plans for growth.

3. A source of discretionary capital

Loans have a number of caveats. Collateral is used, debt is placed on the balance sheet, and credit ratings are impacted when a loan is secured. Perhaps the biggest restriction is that businesses need to use loans for their intended purpose. If a trucking company takes out an equipment financing loan, then those funds cannot be used for commercial space, marketing, or anything else. Freight bill factoring is completely discretionary. Since the capital provided is revenue from unpaid invoices, trucking companies can use those funds for anything they need, from advertising to vehicle maintenance, courting larger customer accounts, and other needs.

4. Creating a financial buffer

Just looking at the past year alone, the trucking industry has witnessed seemingly arbitrary highs and lows in fuel prices, changes in LTL rates, and a push for investments in electric vehicles. Economic downturns and upswings can impact finances for trucking companies of every size. Freight bill factoring enhances cash flow to create a financial buffer so trucking companies can be more recession-resistant, and it accelerates finances so they can get further ahead during economic upswings. Because of the fast turnaround on unpaid receivables, trucking companies can build up their reserves, allowing them to come out on top in any economic climate without relying on loans, taking on debt, or impacting their credit ratings. Freight bill factoring means trucking companies can finance their own future from within, and on their own terms.

Get Started Today

Single Point Capital is a national leader in freight bill factoring services. We offer comprehensive factoring that turns unpaid invoices into cash within a single day. We also provide a suite of tools so trucking companies can manage their payments, track expenses, and more. Single Point Capital also believes in the power of human relationships. No one wants to deal with robots, so we are committed to having real people manage your account, answer your questions, and offer guidance to help your reach your goals. Whether you want to catch up on unpaid receivables, accelerate your cash flow, pivot away from loans, or something else, reach out to the team at Single Point Capital. We will get you set up so you can start taking advantage of the benefits of freight bill factoring.

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