The key to growing a freight company, or any business for that matter, is working smarter—not harder! Of course, that’s easier said than done. Here are a few ways lean and mean freight companies can make cash owed to them work smarter.
Make Your Money Work
Perhaps the most difficult part of running a fleet of fewer than 100 trucks is maintaining positive cash flow. If one truck needs repairs, it can cripple an organization until those wheels can hit the road again. That’s one less account receivable coming in the door at the same time an account payable—mechanic’s services—is outbound.
One way to maintain cash flow without hitting the brakes is by using freight factoring services. A factoring service funds slow-paying freight bills, so fleet operators can keep their feet on the gas pedal. By receiving payments early, operators have money to pay drivers, maintain vehicles, and even expand.
Invoice factoring allows business owners to grow their business without the stress of maintaining cash flow. Fleet operators can’t take their time delivering their goods, so they shouldn’t have to wait for payments once the service is provided.
Here’s how it works:
When a driver delivers freight to a customer, you send the bill to the customer and submit a copy to a factoring service like Charter Capital. The factoring service pays you, and you use the funds to grease the wheels of your successful business. Once the freight customer pays the factoring service, the transaction is finished.
So why choose invoice factoring services over a traditional bank loan?
For starters, getting approved to use invoice factoring is a lot easier than getting approved for a bank loan. For a small or new company that hasn’t had the opportunity to establish credit, a factoring service can fill the void with limited fees and quick access to cash flow. Invoice factoring approval is based on the credit of a business’s customers—not on the credit of the fleet operator or manager.
Invoice factoring avoids debt. A factoring service takes a small percentage from the amount you charge your customers. There’s no debt on your balance sheet and no interest for you to repay. You’ve delivered a service, and by using a factoring service, you’ll be paid almost immediately for services rendered rather than waiting 90 days for the customer to pay up.
Using an invoice factoring service is also a quicker process than getting a bank loan. Some factoring services can issue a direct deposit or wire money the same day. Banks can take weeks or even months to approve a business loan.
The key to growth is working smarter—not harder. That means making your money work smart as well. Don’t let a 90-day wait for customers to pay their bills stunt your business’s ability to grow.