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If High Fuel Bills Are Squeezing Your Business, Turn Towards Freight Factoring

Aug 15, 2008
With fuel prices showing no signs of abating, running your trucks could drain away your finances, since your clients might pay you on the due date, whereas the fuel pumped in your trucks would require instant cash. With every visit to the fuel station requiring large amounts of cash, it could be a good idea to turn towards freight factoring, in order to arrange for the much-needed cash.

You could also turn towards a bank, in order to secure a loan to tide over the fuel crisis. But, with a rising number of borrowers defaulting on their loans, banks too have tightened their norms, while handing out loans. You might be required to arrange for sufficient collateral, as well as provide your audited financial statements showing your business details for the past 3 years. In case you do manage to fulfill both conditions, you will be allotted a fixed sum of money that you will need to pay back along with interest. You will thus need to pay the entire amount in the form of regular monthly installments, which could further increase your stress levels at the start of every month. In case you require additional financing for a short period, then you might have a problem for arranging an additional loan, without clearing the first loan.

Freight factoring, on the other hand, is a very flexible method of financing that simply pays you the amount of your credit invoice immediately without waiting for the due date to arrive. A freight factoring company will 'buy' your credit invoices from you and will wire the invoice amount into your bank account within two days. Therefore, you will receive cash against your credit invoices. This will prove to be a big boon, since you will now be able to pay your ever-rising fuel bills, salaries for your drivers and other employees and even take on larger hauls that otherwise would not have been possible due to cash constraints. The freight factoring company will however, deduct a factoring fee of around 1.5% to 5% from your invoice amount as fees for providing you with this essential service. If your profit margins are healthy enough to divert this percentage to your factoring company, then you can surely turn to freight factoring to solve your cash-flow problems.

An experienced freight factoring company can also arrange to collect the payments from your clients. This again could prove to be a great boon for your business, since you could then concentrate your energy on other issues, such as trying for larger and longer hauls and hiring additional drivers for your business, instead of fretting about delayed payments. Your clients will have to be informed of your arrangement with your factoring company. Freight factoring will therefore act as an extension to your trucking business and also has the ability to keep pace with the growing needs of your business. This mode of finance will depend on the amount of invoices that you submit to your factoring company and the larger the invoice amount, the larger the payout that you can expect in your bank account within a few days.

With high fuel bills, a bitter reality that would stay with your trucking business permanently, turning to freight factoring companies would enable you to run your business efficiently, without any financial or mental shackles to hold you back.
About the Author
Freight Bill Factoring Company the Phoenix Capital Group offers custom fitted Factoring Programs. Factoring is an important part of the Trucking industry in general as seen by this IRS Report . To learn more phone 623-298-3450 or visit: http://www.phoenixcapitalgroup.com/index.asp
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