Cash flow for Trucking, freight bill funding, and freight bill financing are very important and in
many cases it will be the difference in success of any trucking company. In difficult times getting paid quickly for every load you deliver takes on a greater importance. Trucking companies, especially owner-operators, should not have to wait 45 to 60 days or more to get paid for their freight bills. It costs money every day to keep a truck on the road.
It is not uncommon for freight customers to give an advance on a load so truckers can pay for fuel and other trip expenses, but often that is not enough to keep cash flow in balance. Taking a cash advance is really nothing more than a short-term fix to overcome greater financial problems. So how do successful trucking companies break through their cash flow crisis? The answer is freight bill factoring.
Many trucking companies have realized the benefits of freight bill factoring their freight bills in order to establish a long-term positive cash flow solution for their business. Factoring freight bills is nothing more than selling them at a discount to a third party, known as a factoring company, in exchange for immediate payment. And in return, trucking companies can heal their cash flow pains almost overnight, enabling them to put more money back into their business, maintain their operation and fuel growth.
Now you can get paid so you can PAY FOR FUEL, DRIVERS, MANAGE YOUR BREAKDOWNS AND MUCH MORE…. Trucking and factoring can help you get through those lean times. When you have invoices, bills of lading, you have cash sitting right in your hand. Unfortunately, freight bills, and invoices won’t pay fuel bills, drivers, mechanics, tire companies, or that nagging credit card. You have to sell those invoices to a factoring company, freight bill funding company, freight bill financing company, or AR Financing company. They will take your invoices, validate them and in most cases after validation wire the money to your account in as little as 24 hours.
The factoring business is nothing new, factoring and trucking, AR Financing, invoice factoring have been around for a long time. There are dozens of well-known factoring companies that specialize exclusively in the trucking industry. ARFinancing.BIZ and AeroFund Financial, Inc. have been in the business a long time and we know trucking, we know factoring, we know AR Financing. But not all freight bill factoring companies are the same. Choosing the right factoring company for your business takes research, and here are a few important things to know before you start gathering information.
ARFinancing.BIZ Freightbillfinancing.com is not a traditional factoring company. But traditional factoring companies will want you to sign an exclusive contract, which usually lasts for one year and renews automatically, unless you give proper notice of cancellation. You will have to provide detailed information about yourself and your business, including personal financials, company financials, customer lists and more in order to be approved. With most traditional factoring companies, not all trucking companies that apply are approved for factoring due to credit reasons. AR Financing.BIZ does what is right for the small, medium and large trucking companies that need to finance their account receivables and or invoices. Trucking and Factoring is what we do.
Unfortunately, most factoring companies are usually not able to work with smaller trucking companies or owner-operators, which often have the greatest need for a factoring relationship. Unlike the ARFinancing.BIZ/Freightbillfinancing.com program, traditional factoring companies have minimum requirements for the amount of business you do, which is usually at least $15,000 to $20,000 per month. And there can be a lot of paperwork to complete before you are accepted as a customer, which does not always happen.
ARFinancing.BIZ / Freightbillfinancing.com / Freight Bill Funding
Many trucking companies can be turned away at the door by factoring companies, particularly if they have had financial problems in the past or are unable to meet the minimum monthly funding requirements. Shopping for the right factoring company to meet your needs is not always easy. There can be hidden fees, so be thorough in your research. For instance, you may be charged as much as $750 for a one-time start-up fee. Do not pay an opening fee. There is no need to pay a factoring company set up fee.
ARFinancing.BIZ/Aerofund.com/freightbillfinancing.com all does not charge opening fees. There are plenty of factoring companies that do not charge fees.
Unlike the ARfinancing.BIZ/Freightbillfinancing.com program, traditional freight bill factoring companies do not always provide funding the same day they receive your freight bills. If they do, you may have to pay more for that privilege. Generally, you have to factor every freight bill, and the factoring company will advance between 80 to 90 percent of the money. The balance is withheld in a reserve account, which you cannot access.
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This is something you need to be very careful of. Look no factoring company wants to lose money. No factoring wants you to go out of business if you are a good client. However, there are certain things that need to be done in order to make sure that you are legitimate. First, we need to receive those original invoices or bills of lading. We can’t do anything with out those. You can send them via FedEx, UPS, DHL, California Overnight or whatever method you chose to get them here as quickly as possible.
Once received, we need to verify that these are original, legitimate, fulfilled invoices and bills of lading. That means in order to factor your invoices, every factoring company, freight bill funding company; AR Financing Company must and will verify your invoices. This takes time. If the invoices that you are factoring are from Georgia and it is 4 p.m. PST in the afternoon, there is a good chance that we won’t get to the company before the close. They are probably closed already. What we do to mitigate this is to have you fax them to use the day we get your application done and we will call the company and verify the invoices. Then all you have to do is FedEX them to use. We will already have verified those invoices so you will be ready to go.
Yes we do have credit criteria for everyone. That is nothing new and it is nothing new to the factoring, AR Financing, Truck factoring industry. If a factor or one of our competitors says they don’t have any credit criteria for factoring, AR Financing, invoice factoring for truckers, then you should question why. We all have credit criteria. That is how we can keep your rates as low as we have them because we are good at what we do. We make sure that your invoices are good and the credit of your debtor is good also. That is how a good company works. Those fly by night factors that don’t do that won’t be in business very long to serve your truck factoring needs.
As the factoring company receives payment for your freight bills, a percentage of the money withheld is released back to you. ARFinancing.BIZ/Freightbillfinancing.com is recourse program, if a factoring company does not get paid for a freight bill, or it takes longer than 45 to 60 days, they will charge back the full amount and take it from your reserve account, whether you like it or not. That is known as recourse. And for that reason, it remains important for you to make smart business decisions before accepting a load from any customer with a less-than-average history of paying freight bills in a timely manner. We are a 90 day recourse company. This is not a bad thing. 99.99% of the truck factoring companies is recourse and this is a good thing. Don’t let companies scare you into believe that non-recourse is viable. It is not and they know it.
ARFinancing.BIZ/Freightbillfinancing.com program, the negotiated contractual fees or percentage you are charged by factoring companies is commonly based on several things... Factoring companies will establish your base rate, which may commonly vary from 2.5 percent to 7 percent. However, that percentage can increase on a sliding scale with each freight bill, depending on how long it takes the factoring company to get paid. With some factoring companies, the actual cost to you may exceed 10 percent or more for any given freight bill.
Don’t let another factoring company let you think differently. Everyone needs to be paid, including your factoring company. If your customer refuses to pay you before 90 days, what would you do? You would be very upset and initiate collections procedures. Factoring companies are no different. They need to get their money back. We have done the service that was asked of us. We won’t be able to give you more money unless we are able to get paid on invoices we bought in good faith that they would be paid in less than 90 days.
Every contractual relationship has a beginning and an end, so before you enter into such a relationship, it’s important to know the terms. What many traditional factoring companies do not like to discuss is how you can end the relationship. If you break your contract, you will be subject to all the fees for the life of the agreement. And if you give proper notice to terminate the contract, which is usually 60 days before the automatic renewal date, you are put in an awkward situation. If you continue factoring during that time, it becomes difficult to end the relationship, because the factoring company will not legally release you until all open freight bills have been paid. That’s the catch, but don’t be discouraged.
Most factoring relationships do not account for the special needs of owner-operators and small trucking companies. However, our factoring program does.
Our unique recourse freight bill factoring program is now imitated by other factoring companies, but not duplicated. Unlike traditional freight bill factoring companies, with ARFinancing.BIZ there are no term contracts, no monthly minimums and no charge backs for freight bills that meet our funding standards.
With our online website, you can monitor each step of the factoring process at any time. View accurate, easy-to-understand custom reports that you control, have 24 hour access to credit information on thousands of the most popular freight customers and more!
Click here if your trucking company needs money to grow, you want more control over cash flow or have difficulty paying bills or making payroll.