Every business has its slow periods, but in the trucking industry, they’re complicated by clients who may not pay as quickly as you need them to. Sometimes, brokers and shippers take months to pay what they owe you, making it hard to keep up with your business expenses and employee wages and benefits. Sometimes, late payments lead to expensive fines and penalties that can drag your business under.
Digital freight factoring platforms and freight factoring services are game-changers. They’re revolutionizing the trucking industry by providing fast payments and including several beneficial services that make it easier to run and grow your trucking company. We’ll cover the benefits of the available technology and the reasons freight factoring helps trucking companies thrive.
Why Are Cash Flow Problems So Prevalent?
For most trucking companies, payment terms are Net 30, meaning once the invoice is issued, a company has 30 days to pay you. There’s no guarantee that the company will pay on time. If the load was for a government agency like FEMA, it can take months before payments begin to arrive.
In addition to slow payments, there are also slower times of the year when the industry isn’t as busy. Holiday shipments make for very busy months, but things slow down in the summer. When that happens, it can be harder to get work. It’s not impossible though, and a load-finding app is incredibly helpful at having a constant stream of work to keep money coming in.
Freight factoring is a solution to slow payments. Instead of waiting months, get paid within days of delivering the merchandise. Deliver a load, get the signed bill of lading, send that electronically through the freight factoring company’s platform, and request payment. The payment is sent to you as soon as that same day. Use it to pay bills, wages, insurance plans, and other business expenses.
There’s another benefit to freight factoring. Because of cash flow problems, you might find your brokers or shippers abruptly shut down and leave you with unpaid invoices. Freight factoring pays you quickly, and if you have a non-recourse arrangement, you’re protected from these sudden closures.
What Is a Digital Freight Factoring Platform and How Does It Help?
When you sign up with a freight factoring partner, you’re able to access that company’s platform which is packed with beneficial services. It’s often an app you can add to phones or tablets and access the things you need to keep your business running with continual payments.
One of the most frequent uses is to scan a bill of lading, upload it to the company for payment, and check the status. The app is also useful for allowing location tracking to note exactly when you pulled in to deliver a load and when a truck left after unloading the pallets.
Use the app to find more work. Suppose you’re heading on a route from Illinois to Texas with a half-full trailer. It makes more sense to search job boards for another half-trailer load going to the same general area. Haul both clients’ loads at the same time for double the money. Use the app to find loads going back from Texas to Illinois and get paid for the trip back, too.
Six Benefits of a Partnership With a Freight Factoring Company
Partnering with a freight factoring company and taking advantage of the technology offers several benefits. The top six benefits include the following.
#1: Improved Cash Flow
Your driver delivers a load and you have the bill of lading. You bill your customer and are waiting. It’s been a month, and you’re told the check is in the mail. It could be another week or two before it even arrives. If it gets lost in the mail, the wait starts over.
In slow periods, the long wait to get paid becomes stressful. You have bills you can’t pay. It’s getting harder to cover both the wages your drivers earn and their benefits. With a freight factoring arrangement, you get paid immediately and don’t worry about a long wait. Same-day payments are possible, but at the very latest, you’ll have payment in a couple of days.
#2: Happier Drivers
Your drivers are paid on time, and there’s no lapse in their benefits. That makes for happier drivers. Plus, with a steady cash flow, you can make sure you’re keeping wages competitive, which attracts new drivers. This makes it easier to grow your business because you have the drivers you need for increased workloads.
#3: Opportunity to Grow Your Business
In addition to having more drivers to handle more clients, you also have a better credit rating because you’re paying bills on time. A good credit score makes it easier to get business loans and lines of credit. You can then purchase more trucks and trailers. If you rent your business space, you could purchase a building and have that building equity for your trucking company.
#4: Less Paperwork
A lot of the paperwork you do each week takes time to complete. With freight factoring and digital platforms, you’re able to avoid having to generate and mail, fax, or email invoices. The freight factoring company handles the invoicing and leaves a file that you can upload to your bookkeeping software.
#5: More Efficient Operations
Freight factoring digital platforms offer far more than invoicing. They can connect your company to free business credit reports to ensure the clients you choose have a solid credit rating. You’ll have access to job boards, load tracking software, fuel discounts, mobile scanning of bills of lading that you submit for fast payments, low-interest business lines of credit, and many other options that help optimize your company’s efficiency.
#6: Save Money
While there are freight factoring fees, your company saves money in other areas. When you’re being paid regularly, you are able to keep up with bills. None of your creditors are being paid late, which means late fees pile up. Plus, payments that are late enough end up on your credit report. Dings on your credit report make you less appealing to new clients, and it makes it harder to get approved for low interest rates on business credit cards and business loans.
Freight factoring is a rapidly changing industry. With advancements in technology allowing for faster payments, easier tracking, and assistance finding the best routes and lowest fuel prices, it’s a good time to look at all of the benefits of factoring. Keep a strong cash flow throughout the year by partnering with Saint John Capital.
