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Imagine if you could collect on an invoice the same day you make a delivery. What would that mean for your trucking company? Well, for one thing, it would put an end to your never-ending search for credit. Better yet, it would finally put an end to your cash flow problems. Does this sound too good to be true? Well, it isn't. Today's receivables factoring solutions simplify how trucking companies finance their deliveries and their operations. In fact, it's an asset-based lending option that not only helps you finance current deliveries, but it also helps you eliminate any outstanding backlogs.
The Rise in Popularity of Receivable Based Lending
Receivable based financing isn't just for enterprises that are unable to secure credit with a bank. Instead, it's a viable tool for securing the working capital trucking companies need to keep their business running. Receivables factoring is the most common asset-based lending option. It is relied upon as a means of financing by millions of businesses.
There are numerous benefits to using this recivable-based credit solution. First, freight factoirng for trucking companies is not a loan and you won't need to represent it as a loan on your company's balance sheet. Second, the decision to advance your trucking company funds is based on the account debtor's (your customer's) credit rating and history. This makes it an ideal financing solution for companies that have less than ideal credit ratings. While your credit rating does play a role, it simply doesn't play the most prominent role in establishing the credit line. Third, receivables factoring reduces the costs associated with receivables collection: You no longer have to chase customers for payment and struggle with long receivable collection times of 30, 60 and 90 days. Finally, it allows you to exert more control of your company's financing: You can use receivables factoring with customers who have a history of late payments, while keeping the rest of your customers under your existing financing structure.
The Simplicity of Receivables Factoring
With receivables factoring, you no longer have to cover your bills with your own personal credit cards. Most importantly, you no longer have to face a daily struggle to balance your payables and receivables. Instead of dealing with an endless supply of issues, you'll simply benefit from an easy-to-use asset-based lending option. Receivables factoring allows you to level out your cash position, reduce your costs of money and simplify how you manage your trucking company's day-to-day operations. So how does this asset-based financing option work?
How Does Receivables Factoring Work for Trucking Companies?
There are several advantages to using receivables factoring. First, your company doesn't have to burden itself with time-consuming and repetitive credit checks. The financing company will do this for you. Second, you'll access immediate working capital. You'll no longer have to rush to the bank or push off other credit obligations just to make ends meet. Third, you'll be able to pursue any opportunity with any customer. With receivables factoring, you'll put an end to the constant cash crunch and get back to growing your business.