Benefits of Truck Factoring

Posted in: Freight Factoring News- May 20, 2013 No Comments

Being a proud owner of any newly founded business venture will be a move in the right direction, trying to secure financial assistance from banks and other commercial lenders can be nothing short of an uphill struggle. You may find that you are unable to convince the lenders that you are a wise choice of investment. This is a dilemma that has become even more pronounced with the global credit crunch and so banks are now more skittish and cautious than ever before about the lending of money.

Banks/Venture capitalists are financial providers that specialize in the provision of startup capital and working capital to new businesses; however, the only problem here is that the venture capitalist firms tend to charge an astronomically high fee to finance you. Given that a your business which has just only recently been founded will need to ensure that it is as frugal with its money as much as possible, And venture capitalists offer such costly services that maybe a luxury that is just out of reach for you financially speaking.

These issues are not the just the issues of the newly founded businesses, and even established businesses such as transportation, freight and trucking companies can find themselves struggling to keep up with their own current liabilities by issues of the tardiness nature of their customers. Think about this scenario. A trucking company seeks to deliver some high value stock (such as livestock or oil) some 400 miles. Even if he fuel tank is full, the driver responsible for the delivery is going to have to refuel. The driver is not going to be able to fill up and then proceed to calmly tell the clerk:

“No problem, I have $150,000 of stock in my truck. I’ll send you a check when it is sold and the net value is released.”

It is for that exact reason that truck factoring is an excellent source of financial stability for trucking companies, as it helps to efficiently go around the majority of the frustration and logistical problems so often attributed to bank/venture capitalist’s sources of financing.

With truck factoring, the trucking company will receive a substantial portion of the net value of the accounts that are outstanding directly from the factoring company. Plus the factoring company will then proceed to take full responsibility for the billing process, ensuring that the trucking company can focus squarely on its business.

One of the major reasons that truck factoring is such a successful relied upon method for securing and raising sums of capital is for the fact that trucking companies will not be required to secure any of their assets of the business as collateral.

Plus, this method is not a loan and therefore, the actual credit score of the business means nothing to the process. And since they are actually giving the responsibility to the factoring company in this way, your company will actually be improving your credit score!