Trucking isn’t cheap. Make sure you’re doing anything you can to save money on the road. Check out these easy tips from an actual truck driver!
Benefits of freight factoring (For your freight or trucking company)
Why should you have a trucking or freight company?The potential market is huge: transport services address both to legal entities and individuals. It is a relatively small investment to start the business: you can start a business with an amount of up to € 40-45000. The business start can be made with reduced staff and not require super-qualified personnel. Of course, like in any business, there are also risks, only willingness and good intentions are not enough to succeed in such a business. The increased risk of bankruptcy due to not collecting payment of invoices and permanent dependence on customers makes all this to look like a very risky business. Basically, the idea to open a transport company is a good business idea, but you should think about how you might pass with flying colors over problems that could occur in your daily activity. Unlike other areas it is easy to find work, but it is not easy to get some reasonable profits. Exactly for these main issues, the freight factoring companies appeared. I have only exposed a few problems with which trucking companies are facing. In practice, there are many more problems, from employees to hazardous accidents or frivolous clients, but all of these can be resolved by having a good contract with a freight factoring company.What is freight factoring?When a business agreement is settled between a trucking and a freight company, they have immediate expenses that require funds. Factoring is an alternative to lending money or making credits. By completing a freight delivery and sending the invoices to the factoring company, you will receive cash in advance. Even if your firm is having a negative cash flow or your experiencing turnarounds situations, you still can be eligible to benefit of a factoring freight invoice. Advantages of freight factoringIt is a very quick funding; you can get your cash in just 24 hours. Unlike getting a loan, freight factors have a rapid approval time, because the list of needed documents is much shorter. You also can get a discount for fuel purchases and there are no setup fees or hidden costs, especially because the contract is not on a long term, being even temporary. No one forces you to do a minimum number of transports or a minimum amount of profit per month; the work volume remains at your choice.Recourse versus non-recourse factoringA good option for the companies, that cannot afford the risk of customers not to pay or even the risk of having such a client, is the non recourse freight factoring. This way, you will get the invoice paid up front, but you will get a bigger factoring fee because the freight factors assume a much higher risk of not getting their money back. The best case scenario is that your clients have a solid payment history or they have demonstrated that they have money available. In this case, it is best to choose a recourse factoring, so you will pay lower feed without taking any risks.
Working with a freight factoring business can do wonders for your freighting company. If you work with a reliable and proper freight bill factoring service provider, you can do a lot of good for your company.
A freight factoring service can give you access to more funds because of the cash advances you can receive from them. There is no need to wait anymore for weeks on end just to receive payment for a job that you already had completed much earlier. Using a freight bill factoring service can help you cover any expenses that you might incur in your business operations. After all, fuel costs to keep your truck running could be very hefty. That is why receiving some cash advance payments could keep your truck running and keep your income from coming in too.
A freight factoring service also has the benefit of making it easier for you to find jobs too. Factoring service providers will often give you access to invoice jobs that they have already bought and are willing to provide to you. Not only does freight factoring service make it easier to find shipping invoices, but you may also even be able to expand your business by being able to find more customers too.
As you can see, there can be many advantages to working with a freight factoring service provider. But before you jump in and work with a freight factoring company, you may want to ask them a few questions first. Here are a few questions you have to ask your freight factoring service provider before you hire their services.
- Do they support fuel cards?
Freight factoring companies, at least the good ones, should offer fuel card support for their clients. This is because a fuel card can help you, as a truck driver, save a lot of money. How exactly does a fuel card help? The cash advance for a job can be stored on your fuel card, which is provided by the freight factoring company. You can then use this card to exclusively pay for the fuel you will need on your trip. This fuel card can help you in a multitude of ways. First of all, you do not need to worry about having enough cash for fuel; you can just use the fuel card provided to you by the factoring company. Secondly, you will also be glad to note that if a job will require more fuel than necessary you can just contact your freight factoring company to advance you more cash for fuel.
- How long are their standard contracts?
As a freight truck operator, you will know the changing demands of your industry. And because of those changing demands, you may not want to be tied down for too long with a single contract with a freight factoring company. You will want to clarify if the company offers contracts of varying length that you can avail of.
- How much is their advanced payment?
You will also want to know how much the company will advance to you from a shipping invoice. Most companies will offer 90-95% advances when you finish the job, the rest of the 5-10% payment will come after the client has fully paid the job. Ask the company their policies on payment advancements.
- How much is their commission rate?
Freight factoring companies often take a percentage of the total payment of the shipping invoice. You will want to ask them their commission rates, to check if you can afford their services.
- Ask them for a short trial period
One thing you can ask your freight factoring company is if they are willing to work with you for a job or two. After all, you will not know how they will be like unless you try them out.