Cash flow shortages can create major headaches for transportation and logistics companies. Being in the transportation business can be costly because of the need to pay for different expenses like drivers, trucks, repairs, and fuel. These expenses can add up very quickly making it difficult for a growing company to keep up with expenses. To make matters worse, transportation and logistics companies are often paid on 30 or 60 day invoices. Since the immediate expenses need to be paid up front for the delayed income that will usually be collected from invoices 30 to 60 days later, transportation and logistics companies must be able to make effective use of financing.
Large companies usually have access to cash reserves, business loans, and other forms of financing to weather such cash flow shortages. However, in most cases small transportation businesses do not have access to these forms of business financing. This can leave your business strapped for cash and unable to continue to grow operations. So how can a small transportation company overcome their cash flow management problems so they can continue to fund growth?
One solution that works very well is called freight bill factoring. Never heard of freight bill factoring? Freight bill factoring companies buy your invoices at a small discount, providing upfront payment. This eliminates the wait for payment and allows you to pay your business expenses as they are incurred, leaving cash available to grow operations.
Freight bill factoring companies usually pay for 90% of the invoice upfront, and the remaining 10% upon payment received from the original customer. This kind of financing is available to small businesses, partly since the freight bill factoring companies are buying the invoices rather than lending money. This means that their biggest concern is the creditworthiness of your clients rather than the usual criteria to receive a loan.
The cost of freight bill factoring is dependent on the credit worthiness of your clients, the length of time the invoice will be outstanding, and monthly sales volumes. Therefore, companies with credit worthy clients, shorter invoice outstanding times, and high sales volumes will have lower costs.
Aerofund Financial, Inc focuses on freight bill factoring which will get you the highest advance in your industry. “How Invoice Factoring Can Help Your Business” explains how factoring companies such as Aerofund will benefit your small business. Personal service is assured no matter the size of your account.
