Working capital is something every business needs in order to maintain growth and remain profitable. When a company’s cash flow starts to become unreliable however, they are forced to go to great lengths to reach a comfortable margin for operating, at prices that are difficult to justify. Most commonly, they apply for a bank loan but even if they should be approved, there are high interest rates to contend with. Eventually, some enterprises find that financing their business through loans does them more harm than good, and ends up costing more in the long term. There are ways to run a lucrative business and save money by avoiding money borrowing altogether, so long as there is consistent work. Invoice factoring helps you meet all of your payroll, tax, raw material, and supply costs and helps you cover critical expenses in order to keep your business functioning in a number of key ways, without the hurdles that come with costly loans.
Improved cash flow
Instead of waiting for your customers to pay their outstanding invoices, freight factoring allows you to access immediate cash that you can use to achieve your business objectives instead of waiting 30, 60 or even 90 days to get paid on your outstanding invoices.
Freedom to seize new opportunities
Because cash flow is directly tied to your invoices, factoring allows a third-party company like Accutrac Capital to worry about collecting invoices on your behalf, while you take advantage of new opportunities for growth. Whether it’s new sales and marketing initiatives, new equipment for expansion, or the ability to secure new accounts, factoring frees up your time and labor to focus on growing your business.
A better alternative to bank loans
Many lenders and banks avoid lending to invoice-reliant companies, and often place unrealistic hurdles between you and the money you need to operate. Freight bill factoring offers you the ability to maintain working capital for your business while a third party takes care of the outstanding invoices you are owed. Relying on a factoring company for trucking industry needs is now a commonplace practice, and makes up part of many businesses’ financing strategies.
Additionally, factoring companies offer discounted rates on fuel and currency exchange for clients who take on jobs across the border. They even offer equipment financing for those who wants to grow their fleets but who do not have sufficient enough collateral to be approved by the bank. Partnering with a factoring company allows businesses, and especially start ups, to create positive cash flow when first getting themselves off the ground. They also provide funding for clients where they would not otherwise be eligible, as qualification is based on the credit worthiness of the client’s customers.
The best way to improve cash flow is to choose invoice financing or factoring as an alternative to a commercial line of credit. Paying a small percentage to have outstanding invoices taken care of is worth the opportunities that acquiring your sums upfront can give you. Finally, it alleviates the frustration of dealing with tardy customers, or waiting to get paid (or paying your workers!) and having that be out of your control.
James Hendrickson is an internet entrepreneur, blogging junky, hunter and personal finance geek. When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors. James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College. He loves individual stocks, bonds and precious metals.
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