1st Commercial Credit

Learn About Funding and Supply Chain Finance Solutions, Business Tips, and Industry Related Articles.

Over 18 Years in Business

Recent Transactions

invoice factoring for a staffing agency - oil filed services


Staffing Oil Field Service

invoice factoring for a po funding valve importer from china for inventory, freight and duty fees


Valve Importer PO funding

Lending Companies That Fund the Trucking Industry

The trucking industry is an essential part of the American economy by transporting raw materials, finished goods and in-process inventory via land. Typically, trucking involves taking these items from a manufacturing plant to a retail distribution center. Other trucking services used within the economy may include freight forwarders, logistics services, private transportation services, for-hire freight carriers, and companies that service and maintain trucks.

Not only is the trucking industry largely responsible for moving goods across the country, but it also helps to stimulate the economy in other ways. This industry employs millions of people at various levels. Business operations help to generate revenue. Additionally, trucking consumes materials and use services from other sectors.

Trucking services in America also play an important role in the construction industry. Workers need portable mixers and dump trucks to move building materials such as rocks, debris and concrete during construction. In all, trucks are vital in transportation services, warehousing and manufacturing.

Funding Issues for a Vital Industry

Nevertheless, the trucking industry is categorized as a high-risk loan sector by banks. This places business owners in a precarious position when looking for lending companies willing to fund their company. Generally, it can take months to receive a business loan or capital for expansion.

Traditional funding avenues are not the best financing options for the trucking industry. These lending sources usually have a lengthy application process that requires collateral and extended periods to evaluate personal financial histories and company assets. In some cases, funds are denied by traditional lenders, which leave trucking businesses in an unhealthy financial position.

For the trucking business that needs to buy a new truck, pay employees or service the current fleet, time is of the essence. Waiting for months defeats the purpose of applying for funds. The business will not survive waiting for an approval. The owner risks losing property and business prospects.

Competitive Landscape for Trucking

The competitive landscape cannot wait for approval from a traditional bank. Demand in the trucking industry is driven by consumer spending and the output of manufacturers. Efficiency within business operations help to spur profitability.

For large trucking companies, account relationships, bulk pricing for fuel and maintenance, fleet size and drivers create an advantage. Smaller operations can also compete when they can provide fast turnaround services or offer specialized services.

Operating Procedures for the Industry

The popular image of the trucking industry is the large semi-trailer truck cruising down the highway and carrying goods for long distances. While this image is true for some operations, it is not the full scope of the industry. For one reason, trucking equipment is diverse, includes small vehicles and various types of equipment.

Another reason is that more than half of truck loads travel 100 miles or less. Nearly half of truck revenues come from local and regional hauls. Generally, trucking is pervasive as it serves as the dominant choice for small businesses that rely on express packaging services.

Cost of Processing Freight Invoices

Many factors contribute to the cost of processing invoices for trucking services. These include direct and indirect labor, administrative, communications and supplies. Everyone involved with moving goods from point A to point B is accounted for when determining costs. There is a cost to receive invoices and check for duplicates, resolve discrepancies, verify shipping rates and getting approval.

The final processing step is getting paid, which can raise concerns for trucking companies.

Cash Flow Concerns for Trucking Companies

Like most industries, cash flow is a primary concern for trucking companies. Some clients demand extensive 60-day payment terms. Even after 60 days, payment could be slow to arrive. In the mean time, daily costs for fuel, payroll and a variety of other expenses to keep the business afloat cannot wait 60 days.

Meeting these expenses on a regular basis requires management of expenses and income. Otherwise, the trucking company will not have sufficient funds to cover vital expenses. Eventually, trucks needed to move goods will come to a grinding halt.

Ideally, this problem is solved when customers pay sooner than 60 days. Revenues accelerate, cash is flowing and worrying about meeting payroll is just a dream. In reality, this is not the case for most trucking companies. Because of this, trucking companies look for lending sources to solve cash flow problems.

Traditional Financing vs. Invoice Financing

Looking at traditional business financing can be a critical mistake for most trucking companies. While a loan or business line of credit might be available for some, these are not the only alternatives for financing. Qualifying for a business loan can be a long, difficult process.

Most traditional institutions are not eager to lend to transportation companies; those that do have underwriting requirements such as impeccable financial records and using assets as collateral. Small trucking companies might not meet these requirements and large ones may not have the time to wait for approval.

Fortunately, traditional financing is not the only option for trucking companies that need funds. A viable alternative is invoice financing, which can solve cash flow problems created by delayed payments from customers.

Lending Companies Offer Invoice Financing for Truckers

Basically, lending companies for trucking companies that fund open invoices awaiting customer payment. Instead of using essential trucking equipment as collateral, invoices become the guarantee. The trucking company receives funding immediately and their cash flow problem is solved.

In addition, underwriting requirements for borrowing on invoices is significantly easier than with traditional financing. The value of invoices is the most important collateral in receiving funds. Therefore, customers for the trucking company should have good commercial credit. This can benefit trucking owners who can use the credit worthiness of customers to keep their business moving.

Another advantage over traditional loans is the flexibility in borrowing against invoices. Lines of credit are typically tied to the growth of the trucking business through invoices. As the trucking company secures new customers, it can use this funding option to fill gaps from slow paying customers.

Having the ability to control cash flow can make or break a trucking business. Whether the company is a solo operator or a large company with over 50 trucks, the economy depends on these services.

Sure, some trucking companies might buy float time by using credit cards until customers decide to pay. Others might even continue to approach traditional banks to make humble requests for a business line of credit. However, financing invoices is a credible option that does not require long wait times and extensive applications.

In general, factoring provides the cash trucking companies need to keep the wheels turning. They can count on stability when it is time to gas the trucks or pay drivers. Slow paying customers are no longer a threat to the viability of these companies that provide an essential service to the economy.